[Congressional Record Volume 143, Number 13 (Wednesday, February 5, 1997)]
[Extensions of Remarks]
[Page E174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            LEGISLATION TO CHANGE BUDGET SCOREKEEPING RULES

                                 ______
                                 

                      HON. JAMES A. TRAFICANT, JR.

                                of ohio

                    in the house of representatives

                      Wednesday, February 5, 1997

  Mr. TRAFICANT. Mr. Speaker, today I am introducing legislation to 
change the current budget scorekeeping rules as they relate to Federal 
real estate transactions. The bill is identical to legislation I 
introduced in the 103d and 104th Congresses. I originally introduced 
the bill in response to hearings I held during the 103d Congress, when 
I served as chairman of the Public Works and Transportation 
Subcommittee on Public Buildings and Grounds. The hearings focused on 
the way in which the Office of Management and Budget scores Federal 
real estate transactions. The hearings underscored previous findings by 
the General Accounting Office that the Federal Government is wasting 
hundreds of millions of dollars a year in unnecessary long-term leases. 
The waste is due primarily to the fact that current budget scorekeeping 
rules prevent the General Services Administration from pursuing a full 
range of financing options to meet the Federal Government's office 
space needs. These practices continue to this day.
  My legislation has received strong bipartisan support in the past two 
Congresses. The bill changes Federal budget accounting rules to allow 
GSA to utilize a full range of financing mechanisms in meeting Federal 
office space needs. Under current Federal budget scorekeeping rules, 
which were established in the 1990 Budget Act, the entire cost of a 
Federal construction project or building purchase, must be scored in 
the first year of the project, rather than amortized over the actual 
construction period, or over the expected life of a purchased building. 
For leases, the rules require that only the annual rent costs be 
scored. The end result is that operating leases have become the most 
attractive vehicle for GSA, the Federal Government's real estate arm, 
to meet the housing needs of Federal agencies--even though in the long 
term it is the most costly.
  Specifically, the bill amends the Public Buildings Act of 1959 to 
treat Federal real estate transactions in the same manner they wee 
treated prior to the implementation of the 1990 Budget Act. The bill 
would allow GSA to utilize alternative financing mechanisms, such as 
lease-purchases or time financing.
  In 1975 GSA's leasing budget was $388 million. In 1996 GSA spent more 
than $2.5 billion on Federal leases. A December 1989 report issued by 
GAO analyzed 43 projects that GSA might have undertaken if capital 
financing were available to replace space that GSA would otherwise 
lease. GAO estimated that, over a 30-year period, constructing the 43 
projects instead of leasing, would have saved taxpayers $12 billion.
  Financing by lease purchase is inappropriately being compared by OMB 
to direct Federal construction, when the correct comparison should be 
with the cost of long-term leasing. My goal is to ensure that GSA has 
all the financing tools available to the private sector. Currently GSA 
does not have the ability to get the best possible deal for the 
taxpayer--because of the scoring rules. GAS should be able to, on a 
project by project basis, determine the most cost effective and 
efficient way to finance a particular Federal real estate transaction. 
My bill will give GSA this ability. In the long term, this legislation 
will save the taxpayer hundreds of millions of dollars. I urge my 
colleagues to support the bill.

                          ____________________