FISCAL YEAR 1999 OPERATING BUDGET

Last year's appropriations request was based on a comprehensive agency-wide planning and coordination process including all cyclical maintenance projects and building system enhancements. The thorough, systematic and programmed analysis led to a proposed five-year capital budget based on that planning. At the House Subcommittee on Legislative Branch Appropriations direction, I evaluated the five-year capital budget and especially the projects requested for fiscal year 1998 to determine if the previous effort was valid and the resulting request realistic. I did so, personally evaluating each of the 205 projects in the five year plan. I also re-prioritized the request, re-defining them into categories such as Life Safety, Security, Cyclical Maintenance, Technology and Management Systems, etc. This is the same approach I have taken this year and I will now discuss our fiscal year 1999 budget request in detail. There are two major components to this budget request: an Operating Budget and a Capital Budget, as described below. The total budget that I bring to this Committee today amounts to $241,272,000, comprised of $153,812,000 for operating costs and $87,460,000 for capital costs.

Increases in the costs that comprise the operating budget totaling $153,812,000— that is, those costs that support operations and maintenance, including salaries, are relatively small, 5.8 percent overall. If the one time election year costs totaling $1,000,000 for all activities are reduced from the operating request for fiscal year 1999, the increase amounts to approximately five percent. The operating budget also reflects several years of gradual declines in real dollars appropriated for operating the Capitol complex. Although there are several small increases requested for various operating allotments, the majority have been continued at the current funding level without adjusting them for inflation. Of our 170 annual allotment lines in this request, which include personnel compensation and benefits, 95 lines or 56 percent were either reduced or are unchanged from the current fiscal year.

There are opportunities for savings within our operations budget, some of which will require modest investments to achieve, and others which we are proceeding with at this time. Under the overall category of "utilities," we are confident that investing in modern automated control systems at the Power Plant will lead to more efficient use of fuels, and eliminate the need for staff that presently manually monitor the heating and cooling equipment. Additionally, we are nearly complete with the installation of energy efficient lighting fixtures across the campus. These lighting fixtures are already saving electrical energy. But the true savings will not be realized until after the contractor is reimbursed for the installation cost. Clearly the largest portion of our operating budget is invested in our budget for salaries and benefits, and that is where the greatest opportunity for savings lies. I will have more to say about the operating budget and describe how we are exploring specific options that may lead us to achieve greater efficiency and cost effectiveness later in my testimony.

The requested increase for fiscal year 1999 falls into several categories. Nearly two-thirds of the requested operating increase is due to mandated pay costs and the government's share of benefits costs. Nearly twelve percent of the requested operating budget increase relates to the one time election move cycle costs: these occur every other year to meet the need to house Senators and other staff based on room assignments arising out of the elections. An agency-wide uniform program is being proposed based on the pilot program now underway in the Senate, and this accounts for six percent of the requested increase.

The following table indicates these increases by appropriation.

FISCAL YEAR 1999 FIVE YEAR CAPITAL BUDGET

The fiscal year 1999 capital budget request I present to you today flows from the first five-year capital budget presented last year by this agency. It is grounded in a comprehensive and systematic agency-wide planning effort with in-depth involvement by all of the agency's clients. On the Senate side we included the Sergeant at Arms and the Secretary of the Senate. On the House side, we included the Sergeant at Arms, the Chief Administrative Officer and the Clerk of the House. The U.S. Capitol Police provided a detailed outline of their needs, and the Librarian of Congress was also extensively involved. A total of 228 capital projects have been identified for the five year period.

As discussed last year, there is a need to provide the Congress with such a fiveyear capital improvement budget to assist the Congress in making the wisest and best informed financial judgments based on a formal evaluation of future cost implications and with the assurance that we have undertaken a rigorous examination of related needs.

The projects included in this budget, therefore, reflect all the needs that have been identified to date. We reviewed all of the projects that were requested and not funded last fiscal year to determine if they should be included in this year's request. We also closely examined all those projects that, based on last year's plan, had been projected for this fiscal year's request to make sure that their inclusion was also still valid. As stated above, also included are several significant new projects that were not even envisioned last year. We have adjusted the out years accordingly and I will continue to evaluate these needs and to update them to ensure that the capital budget is responsive to budgetary issues, programmatic changes, the condition of the buildings and their systems, and any other needs that may arise.

At last year's hearing, we discussed the potential of a future "balloon payment" that might result from the accumulated costs of deferred maintenance. I indicated that based on several infrastructure reinvestment models we were targeting approximately 1.7 percent of the replacement value as an order of magnitude funding level for the Capitol complex. Last year that figure amounted to roughly $52 million, which was in line with the $52,151,000 that we had requested for reinvestment. The actual funding that was approved totaled $33,872,000, thus leaving a reinvestment funding gap of $20,279,000. Once that figure is adjusted for the Botanic Garden Conservatory request of $8,300,000, which was provided for in the fiscal year 1997 emergency supplemental, the reinvestment gap reduced to $11,979,000. We have reinitiated our request for $8,235,000 of these projects in the fiscal year 1999 request. The capital budget that is being presented today is part of a multi-year funding plan that provides the Congress a clear view of what it will cost to maintain the Legislative Branch infrastructure in proper operating condition. The capital budget also identifies improvements that respond to new legally imposed standards and guidelines, such as improvements to meet the requirements of the Americans with Disabilities Act and the Occupational Safety and Health Act. There are also several projects that will enhance the operations of the Congress, as well as new projects requested by our clients to serve their programmatic needs. Balancing the needs of maintaining the existing infrastructure while keeping pace with technological enhancements and program needs is clearly costly and it is sometimes difficult to spread these costs out over time in order to avoid significant peaks in the budgeting process. But I firmly believe that deferring these infrastructure reinvestment costs in the short to mid term can ultimately lead to far greater costs in the future. We are all also aware of the effect that technological pressures can have on aging building systems, especially from the perspective of being capable of delivering new telecommunications technologies.

As discussed above, these projects have been categorized into similar types of projects that reflect various initiatives that we are now faced with. These include categories such as Life Safety, ADA, Security, Cyclical Maintenance, Improvement, and Technology-Management Systems. When a particular project category has been requested to meet specific client needs, the category will note "client." When a particular project category has been initiated by this office, it is noted “AOC.” A more detailed explanation of these categories follows.

Life Safety-These are programs essential for complying with the Occupational Safety and Health Act, environmental and hazardous material protection, fire code compliance, and other regulatory matters affecting the general health and welfare of building occupants. The Congressional Accountability Act has placed significant emphasis on ensuring that the Capitol complex is free of hazards to the Senators, Members, staff and visitors.

ADA. These are programs essential for complying with the Americans with Disabilities Act of 1990. Passage of the Congressional Accountability Act has reinforced

the resolve to ensure that the Capitol complex is free of barriers to the Members, Senators, staff and visitors.

Security.-These are programs to meet the needs created by increased terrorist activity throughout the world. As a result there is a heightened sensitivity toward threats to security at the Capitol complex. In addition there are security needs to protect property such as the collections at the Library of Congress.

Cyclical Maintenance.-Several of the buildings in the Capitol complex are reaching an age and condition that necessitate major renovation or replacement of building systems. Various improvements are recommended to assure that these building systems continue to provide service to occupants.

Improvement.-Technology is changing far more rapidly than our existing building infrastructures can support and adapt to. This is especially true in the rapidly expanding area of telecommunications, but there is a corollary effect that is felt in any building system that uses any sort of electronic technology for operation or support. These are programs that reflect either the replacement of existing building systems to generate a significant operational improvement or benefit, or the installation of a new type of technology or system to create such an improvement or benefit.

Technology-Management Systems.-These are programs that reflect the internal (AOC) use of computer applications and telecommunications systems to improve the efficiency and effectiveness of operations.

It is important to note that over $34 million of the nearly $87 million requested in fiscal year 1999 is for capital projects related directly to client requests, i.e., $4,022,000 for the Library of Congress and $23,745,000 for the U.S. Capitol Police. In fact two major costs account for 30 percent of the budget: the Perimeter Security Project ($20 million)—and the first year major increment for the Capitol Dome Project ($7.5 million), which is based on the part of the ongoing project studies that has been completed to date.

The fiscal year 1999 budget request for the Architect of the Capitol also has been prioritized as directed by the House and Senate Committees on Appropriations. I have sub-divided the former three-tiered system further to give greater detail to the Committees for their decision-making. The requested items now are identified by the following priority levels: 1-A, 1-B, 1-C, and 2-A, 2-B, and so on through 3– C at the lowest end of the priority scale.

Both the categories and priorities will assist the Committee in its decision-making process. Clearly this request is large, and I am aware of the overall budgetary constraints and the realities of additional funding beyond modest increases. I want to assure the Committee that we will work with you and provide our best recommendations as the budget review process proceeds.

It is also important to recognize that these requirements do not simply disappear if deferred. If projects requested for fiscal year 1999 are deferred, the costs to accomplish them will rise due to added deterioration, increased maintenance costs to sustain the systems in the interim, inflation, and fluctuations in market conditions. The deferred projects also will then add to the fiscal year 2000 funding need much as the 1998 deferred projects are adding to this budget.

In last year's testimony, I detailed many of the reasons that there was such a large increase in the funding level required for the maintenance of our campus infrastructure. Rather than repeat those reasons verbatim, I will highlight them here: Replacement of Aging Building Systems. Several of the buildings in the Capitol complex are reaching an age and condition that require major renovation or replacement of building systems.

Technological Advances.-Technology, especially in telecommunications, is changing far more rapidly than our existing building infrastructures can support and adapt to.

Regulatory Compliance Requirements.-Programs essential for complying with the Americans with Disabilities Act, the Occupational Safety and Health Act, security, and environmental and hazardous material protection have received very high priority in terms of advancing the timetables for completion due largely to passage of the Congressional Accountability Act.

Security.-Terrorist activity throughout the world has increased, and as a result there is a heightened sensitivity_toward threats to security at the Capitol complex. Infrastructure Reinvestment.-Replacement Value-We have developed an annual investment rate of 1.7 percent of the replacement value of the Capitol complex as an order of magnitude guide for capital funding levels. In comparison, the fiscal year 1999 request related to existing facilities of $60.5 million is right on target.

The following table summarizes the funding levels presented in the five-year capital budget by category. Again, these categories include Life Safety, ADA, Security, Cyclical Maintenance requirements, Technology and Management Systems, and infrastructure Improvements. These five year projections will be reviewed, modified

and updated each year as new information becomes available through detailed studies and evolving needs and priorities.

Mr. Chairman, I also wish to point out that this budget was prepared with the intent of requesting planning and design funding well in advance of large renovation and construction project such as upgrading the cable television system, roof fall protection, optimization of the chilled water distribution system, and window replacement in the Capitol Building. Only design funding is requested for these large capital projects in fiscal year 1999 in order to prepare detailed designs and firm cost estimates for justifying appropriations requests for construction in later years.

The following table indicates the capital budget increases for fiscal year 1999.

+21,160,000 +1,967,000 NA.

7,704,000

12,756,000

+66,000 NA.

33,872,000

87,460,000
- 20,000,000

33,872,000

67,460,000

+33,588,000