Veterans Affairs Secretary To Testify on $1B Budget Shortfall
Department of Veterans Affairs Secretary James Nicholson and other VA officials on Tuesday will testify before Congress "to explain why the department has just now revealed budget shortfalls of at least $1 billion" in health care funding in the current and next fiscal years, CQ Today reports (Allen/Starks, CQ Today, 6/27). The shortfall came to light during an administration mid-year budget review and was noted during lengthy questioning of Jonathan Perlin, VA undersecretary for health, by House Veterans' Affairs Committee Chair Steve Buyer (R-Ind.) at a hearing Thursday. Perlin said VA has used more than $300 million on health care from a fund that had been expected to be carried over into the fiscal year 2006 budget. Further, he said as much as $600 million originally intended for capital spending will go toward the shortfall. VA officials told Congress that the unexpected shortfall occurred because they had used an inaccurate, two-year-old financial model to calculate their spending requests. VA officials said the model underestimated the impact of the Afghanistan and Iraq wars and made other forecasting errors. Perlin said budget forecasts are created two years in advance, meaning that the current year's predictions were made before the 2003 invasion of Iraq. Spending growth was projected by VA to grow 2.5% this year but has actually increased by 5% (Kaiser Daily Health Policy Report, 6/24).
Congressional Reaction, Legislation
In light of the shortfalls, the Senate Appropriations Committee has delayed its scheduled markup of its version of the FY 2006 VA spending bill to late July. The House already has passed its version of the VA spending bill. The Senate Veterans' Affairs Committee has scheduled an emergency hearing on the budget shortfall, and the House VA Committee is expected to hold its own hearing later this week (CQ Today, 6/27). In other congressional action on the funding shortfall, Sen. Patty Murray (D-Wash.) has reintroduced a bill that would provide emergency health funding (Bernton, Seattle Times, 6/27). In its earlier form, the bill was an amendment to appropriations legislation for the Iraq war and would have added nearly $2 billion for veteran's health care. Lawmakers previously voted against the bill. In addition, Rep. Chet Edwards (D-Texas) is considering adding to the fiscal year 2006 Foreign Operations spending bill (HR 3057) an amendment that would provide $1 billion for veterans health care. The House Rules Committee on Monday declined a request to protect the amendment from a budget point of order, and it is likely the amendment will "be killed without a vote" if Edwards introduces it, CQ Today reports (CQ Today, 6/27).
Administration Response
According to the Wall Street Journal, the Bush administration believes it can address the budget shortfall by using money from capital accounts and operating funds "that otherwise would be carried over until next year." However, such a solution is a "one-time fix that will exacerbate budget problems in 2006," the Journal reports. Complicating the situation, the House had assumed $800 million would be rolled over to 2006 from 2005 when it approved its $28.8 billion FY 2006 VA health budget, but there is a chance the "rollover money won't be there and the demand for services will be higher than projected," according to the Journal. The Bush administration is working on a budget agreement to address the shortfall (Rogers, Wall Street Journal, 6/28).
