    [Budget of the United States Government]
    [III. Creating a Better Government]
    [21. Undistributed Offsetting Receipts]
    [From the U.S. Government Publishing Office, www.gpo.gov]

                     21.  UNDISTRIBUTED OFFSETTING RECEIPTS

      ----------------------------------------------------------------------

                                     Table 21-1.  Undistributed Offsetting Receipts
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Estimate
                   Function 950                   2000   -----------------------------------------------------------
                                                 Actual     2001      2002      2003      2004      2005      2006
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Mandatory Outlays:
        Existing law..........................   -42,581   -47,656   -51,803   -60,710   -62,399   -56,213   -57,761
        Proposed legislation..................  ........  ........     2,400       331    -8,184    -2,651    -4,617
    ----------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------
       Undistributed offsetting receipts, totaling $49.4 billion in 2002,
    fall into two categories: (1) the Government's receipts from performing
    certain business-like activities, such as proceeds from oil and gas
    leases on the Outer Continental Shelf; and (2) collections of Federal
    agencies' contributions to Federal employees' retirement plans. Receipts
    from all business-like activities are offset against budget authority
    and outlays, instead of being recorded as governmental receipts, so that
    the budget totals represent the amount of resources allocated by the
    Government rather than by the market mechanism. Unlike most business-
    like receipts, which are offset within the same function as the spending
    that gives rise to the receipt, some are so large that it would distort
    the functional totals to distribute them by function. Instead, they are
    undistributed by function and offset against the budget totals.
      Receipts of agency retirement contributions are offset against the
    payments, so that the budget totals measure the Government's
    transactions with the public. These intrabudgetary transactions are
    important for allocating costs to programs that incur the cost, but they
    have no net impact on total budget authority and outlays. They are
    offset against total budget authority and outlays because offsetting
    them within the functions in which the payments are recorded would cause
    the totals for those functions to seriously understate current
    expenditures.

    Rents and Royalties on the Outer Continental Shelf (OCS)

       The Department of the Interior's Outer Continental Shelf lands
    leasing program, which began in 1954, currently generates about 26
    percent of total U.S. domestic production and 27 percent of total
    natural gas production. Since the OCS program's inception, it has held
    131 lease sales, covering areas three to 200 miles offshore and
    generating over $134 billion in rents, bonuses, and royalties--mainly
    for the general fund of the Treasury--with an estimated $5.9 billion in
    OCS receipts in 2002. OCS revenues also provide nearly all funding for
    the Land and Water Conservation Fund.

    Employee Retirement

       In 2002, Federal agencies are expected to pay an estimated $41.6
    billion on behalf of their employees to the Federal retirement trust
    funds, \1\ the Medicare health insurance trust fund, and the Social
    Security trust funds. As civilian and military employees' pay rises,
    agencies must make commensurate increases in their payments to recognize
    the rising cost of retirement. The amount of

    [[Page 150]]

    receipts also changes with increases or decreases in the number of
    employees and changes in the retirement accruals charged to agencies.
    The agency payments and trust fund receipts are offsetting and do not
    affect the unified budget totals. Under the 1997 Balanced Budget Act,
    agency contributions for employees covered by the Civil Service
    Retirement System were increased from seven percent of salary to 8.51
    percent beginning in 1998. These higher contributions are set to expire
    in 2003.
    ---------------------------------------------------------------------------
      \1\ The major programs are the Military Retirement System, the Civil
    Service Retirement System, and the Federal Employees' Retirement System.
    ---------------------------------------------------------------------------

    Spectrum Auction Receipts

       In 1993, the President and Congress gave the Federal Communications
    Commission (FCC) authority to assign spectrum licenses through
    competitive bidding, which has proven to be a very efficient and
    effective way to allocate this finite public resource. Since the
    beginning of the auctions program, the FCC has auctioned over 14,300
    licenses for over $31 billion in actual and expected cash receipts--
    encouraging the development of innovative telecommunications services
    and ensuring that the public receives compensation for the private use
    of a public resource. Over the next five years, spectrum auctions are
    expected to generate more than $25 billion in receipts.
      The Administration is proposing authorization language that provides a
    legislative framework for FCC to develop regulations that promote
    clearing the spectrum in channels 60-69 (747-762 and 777-792 MHz) for
    new wireless services in a manner that ensures incumbent broadcasters
    are fairly compensated. The legislative language would also shift the
    statutory deadline for the 60-69 auction from 2000 to 2004 and shift the
    statutory deadline for the auction of channels 52-59 (698-746 MHz) from
    2002 to 2006. As a result of the increased certainty about how and when
    the spectrum in channels 60-69 will become available for new entrants
    and shifting the deadlines for both auctions closer to when the spectrum
    is expected to become available, revenues for these auctions are
    expected to increase by $7.5 billion.

    Arctic National Wildlife Refuge Lease Receipts

      The Administration proposes to open up the coastal plain of the Arctic
    National Wildlife Refuge in northern Alaska to environmentally sound oil
    and natural gas leasing. The budget assumes leasing begins in 2004,
    generating $2.4 billion in lease bonus bids, with the bid receipts
    shared 50/50 with the State of Alaska. The remaining $1.2 billion would
    be dedicated for research and development of solar and renewable energy
    technology, to be conducted by the Department of Energy over seven
    years.