[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[20.  Undistributed Offsetting Receipts]
[From the U.S. Government Printing Office, www.gpo.gov]


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                 20.  UNDISTRIBUTED OFFSETTING RECEIPTS

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                                 Table 20-1.  Undistributed Offsetting Receipts
                                          (Dollar amounts in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                                        Percent
                                Function 950                                     1993        2001       Change:
                                                                                Actual     Estimate    1993-2001
----------------------------------------------------------------------------------------------------------------
Spending:
  Mandatory outlays.........................................................    -37,386     -47,177         26%
----------------------------------------------------------------------------------------------------------------

  ----------------------------------------------------------------------
  Undistributed offsetting receipts 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

  The Department of the Interior's Outer Continental Shelf (OCS) lands 
leasing program, which began in 1954, currently generates about 26 
percent of total U.S. domestic oil production and 27 percent of domestic 
natural gas production. Since the OCS program's inception, it has held 
150 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 $6 billion in 
OCS receipts in 2001. OCS revenues also provide nearly all funding for 
the Land and Water Conservation Fund. In 1998, the Clinton-Gore 
Administration extended a leasing moratoria for environmentally 
sensitive areas--offshore California, Oregon, and Washington; the 
Eastern Seaboard; the southwestern coastline of Florida, including the 
Everglades; and, certain parts of Alaska.

Employee Retirement

  In 2001, Federal agencies are expected to pay an estimated $39.5 
billion on behalf of their employees to the Federal retirement trust 
funds, the Medicare health insurance trust fund, and the Social Security 
trust funds. (The major programs of the Federal retirement trust funds 
are the Military Retirement System, the Civil Service Retirement System, 
and the Federal Employees'

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Retirement System.) 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 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.

Other Undistributed Offsetting Receipts

  In 1993, the President and the 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. Until the auction 
program was implemented in 1994, valuable spectrum licenses were awarded 
for free through lotteries or time-consuming comparative hearings. 
Through auction, the FCC awards licenses about 40 percent faster than 
lotteries and 70 percent faster than comparative hearings. By the end of 
2001, the FCC will have auctioned over 14,300 licenses and collected 
over $20 billion in actual and estimated cash receipts--encouraging the 
development of innovative telecommunications services and ensuring that 
the public is compensated for the private use of a public resource.
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