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I am writing regarding the fiscal year 1998 appropriation request for the Joint Committee on Taxation (the "Joint Committee").

Key points relating to the appropriation request are as follows:

I am requesting a fiscal year 1998 appropriation for the Joint Committee of $6,126,000.
This amount is a net increase of $656,000 over the fiscal year 1997 appropriation, but
only $107,000 more than the fiscal year 1995 appropriation for the Joint Committee.

In the last Congress, we asked the Joint Committee staff to assume additional
responsibilities. In addition to the traditional role of the Joint Committee staff in the
development, drafting, and estimating of proposed revenue legislation, the Joint
Committee staff is now responsible for determining the possible unfunded mandates
contained in revenue legislation and identifying, beginning in 1997, the limited tax
benefits subject to the Line Item Veto Act.

If the Joint Committee's responsibilities are expanded in any further way, for example, by
expanding the revenue estimating services required or significantly modifying the
revenue estimating process, I will find it necessary to request an additional increase in the
Joint Committee's appropriation to reflect the additional personnel and equipment
expenses attributable to such increased responsibilities. In that regard, I want to point out
to the Subcommittee that a proposed House rule, which is likely to be adopted when the
House convenes for the 105th Congress, would require the Joint Committee to determine
the macroeconomic effects of proposed revenue legislation under certain circumstances.
The Joint Committee staff does not currently have the staff or computer capabilities to
satisfy this requirement. In addition, the Joint Committee is hosting on January 17, 1997,
a symposium presenting the results of a year-long study into the feasibility of

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515–6453

Honorable James Walsh

Page 2

December 27, 1996

anticipate that there will be further interest in pursuing this capability as a result of the symposium and, therefore, the need for additional funding.

The Joint Committee staff provides unique and essential services to both the House of Representatives and the Senate at every stage of the tax legislative process. The Joint Committee staff, comprised of highly qualified lawyers, accountants, and economists, is involved in the development, marking up, and drafting of tax bills and in writing all tax Committee Reports and Conference Reports. In addition, the Joint Committee staff devotes substantial resources to the preparation of revenue estimates, distributional analyses, and other economic analyses relating to proposed legislation. The refund office of the Joint Committee reviews large proposed tax refunds as part of the Congressional oversight of the executive branch. The services of the Joint Committee are central to the tax legislative process.

Additional details relating to this appropriation request are provided below.

A. Summary of Fiscal Year 1998 Budget Request

The following summarizes the Joint Committee's budget request for fiscal year 1998:

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The fiscal year 1995 appropriation for the Joint Committee on Taxation was $6,019,000. The House-passed legislative branch funding bill for fiscal year 1996 froze the Joint Committee

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515-6453

Honorable James Walsh
Page 3

December 27, 1996

reduced the Joint Committee's appropriation for fiscal year 1996 by 15 percent to $5,116,000. This reduction was the result of a provision in the Senate bill, adopted in conference, which generally reduced appropriations of all Senate committees. This was adopted despite the fact that the Joint Committee has always been funded through the House of Representatives. This appropriation was lower than the Joint Committee's budget in each of the last 5 fiscal years. The fiscal year 1997 appropriation for the Joint Committee is $5,470,000, a 6.9 percent increase over fiscal year 1996, but still well below the fiscal year 1995 funding level.

B. Details of Fiscal Year 1998 Appropriation Request

1. Personnel Expenses

I am requesting an appropriation for fiscal year 1998 for the Joint Committee that is $656,000 more than the fiscal year 1997 appropriation, but only $107,000 more than the fiscal year 1995 appropriation. Of this $656,000 requested increase, $649,000 relates to increases in personnel expenses.

Cost of living. As instructed by the House Finance Office, I am requesting $28,000 for the annualized FY 1997 cost-of-living adjustment (2.3%) and $126,000 for a prorated fiscal year 1998 cost-of-living adjustment (2.325%). These amounts are essentially determined for the Joint Committee by the House Finance Office because they provide to us both the compensation base and the percentage adjustments.

Merit increases.—I am requesting an additional appropriation for fiscal year 1998 of $120,000 for merit increases for existing staff.

This request does not include any specific requested amount for possible overtime pay. During 1996, the Joint Committee staff spent considerable time and effort developing procedures to comply with the requirements of the Congressional Accountability Act. One staff attorney worked essentially full time to develop a staff personnel manual that details all of the Joint Committee staff rules and procedures. In addition, she made determinations as to which employees are subject to the overtime requirements and created written job descriptions for each job category. This attorney also spent many hours developing support staff performance evaluation forms and procedures. We have developed flexible staff scheduling procedures for support staff that will minimize, but not eliminate, the need to pay overtime. However, we will be required to devote considerable administrative staff time each year to complying with the

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515-6453

Honorable James Walsh

Page 4

December 27, 1996

modest amount for administrative staff support and minimal overtime payments to comply on an ongoing basis with the requirements of the Congressional Accountability Act.

New hiring.--I am requesting $375,000 for hiring to fill FTE's I am asking the Subcommittee to authorize for the Joint Committee for fiscal year 1998. I expect the Joint Committee to fill these FTE positions with additional professional staff -- primarily staff attorneys, accountants, and economists -- and possibly one or two computer specialists and support staff.

The Joint Committee staff does not now have sufficient numbers of staff attorneys and economists to satisfy the traditional duties of the Joint Committee. The staff needs to hire additional professional staff so that the service provided to the Congress in connection with the consideration of revenue legislation does not suffer.

Furthermore, I believe that this request is eminently reasonable given the new responsibilities that were imposed on the Joint Committee staff by legislation enacted during the 104th Congress. For example, the Joint Committee staff has new responsibilities specifically mandated under the Line Item Veto Act and arising out of the enactment of the Unfunded Mandates Reform Act of 1995 and the review of regulations under the regulatory reform bill. The scope of the Joint Committee staff's new responsibility for any year will be determined by the amount of revenue legislation considered during the year. However, the Joint Committee staff estimates that any significant revenue legislation could require approximately 1/2 full-time employee to satisfy these new requirements during 1997.

2. Authorized positions

I am requesting that the Subcommittee authorize 73 FTE's for the Joint Committee for fiscal year 1998. This number would return the Joint Committee to the authorized staffing level for fiscal year 1995. The Joint Committee has 61 authorized staff positions for fiscal year 1997. Other than fiscal year 1996, in which the authorized staff positions were 63, the authorized staff levels have not, since 1980, been below 66 positions. Thus, the authorized staffing levels of the Joint Committee are well below historical levels. Unless the authorized FTE's are increased to an acceptable level, I believe that the services the Joint Committee provides to the Congress will be compromised.

I would expect that these additional FTE's would be filled primarily with professional

Congress of the United States

JOINT COMMITTEE ON TAXATION

Washington, DC 20515–6453

Honorable James Walsh

Page 5

December 27, 1996

support staff to accommodate the needs of these new professional staff. I expect that particular emphasis would be placed on hiring additional staff economists to continue the Joint

Committee's efforts to pursue the capability of incorporating macroeconomic effects in the Joint Committee's revenue estimates.

I believe that the authorized staffing for the Joint Committee is unacceptably low. The Joint Committee staff will not be able to maintain its reputation for quality service to the Congress unless it is permitted to hire sufficient professional staff members. As a result of the new obligations of the Joint Committee discussed above, the amount of time that the Joint Committee staff is able to devote to the traditional duties analyzing revenue legislation has been diminished. Unless additional hiring is authorized, the service to the Congress will no doubt suffer.

The current Joint Committee staff has shown remarkable dedication in picking up the slack as the Joint Committee is unable to fill the positions of departing staff members. However, at some point, these dedicated professionals, who often take positions on the Joint Committee staff at less than one-half the compensation they would make in the private sector, will conclude that the long hours for less-than-market pay poses too great a burden on their families. This, I believe, would be a great loss for the Congress.

The extremely complex, technical, and specialized nature of the Joint Committee work requires the Joint Committee to hire and retain a highly trained and experienced staff. The Joint Committee professional staff, comprised of certified public accountants, Ph.D. economists, and lawyers with private law practice or significant government experience, agree to work for the Joint Committee at salaries substantially below those available in the private sector. The lawyers on the Joint Committee staff are graduates of the leading law schools throughout the country, and most attained significant honors at law school. Several of them have advanced degrees in taxation. Each had substantial related experience before coming to work for the Joint Committee, either in private practice with major, well-respected law firms, or with the Internal Revenue Service or other government agencies that deal with Federal tax matters. The accountants on the staff each spent at least 3 years in private practice with "Big Six" accounting firms. The staff economists all have advanced degrees. Several have university faculty experience. In addition, many of the economists have substantial experience with economic modeling, both in the government and with a variety of organizations in the private sector.

Despite the competition in the marketplace for tax expertise at the level required by the

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