End of year spending cuts loom over FDA budget

by Jay Sjerven
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The appropriations committees of the Senate and House of Representatives have passed their fiscal 2013 agriculture appropriations bills, which include funding for the operations of the Food and Drug Administration. The two bills differed in their proposed funding levels for the F.D.A., with the Senate bill increasing resources from fiscal year 2012 and the House bill reducing them, but not severely so. But ultimate funding for F.D.A. operations in fiscal year 2013 was not solely dependent on the House and Senate agreeing on a final number. Like all fiscal year 2013 appropriations bills under consideration in Congress, their fates may be tied to a greater drama that has come to be called “taxmageddon.”
The House Committee on Appropriations on June 19 approved its fiscal year 2013 agriculture appropriations bill. The bill would provide $2,481 million in discretionary budget authority for the F.D.A. in fiscal year 2013, down $16 million from the fiscal year 2012 level of $2,497 million and $31.2 million below President Obama’s request for the agency.

Representative Jack Kingston of Georgia, chairman of the appropriation committee’s agriculture subcommittee, said the House bill would fund the F.D.A.’s food safety programs at $866 million, or $10.8 million above the president’s request. The F.D.A. funding under the bill also would include a $10 million increase for food and drug inspections in China.

The Senate Committee on Appropriations on April 26 approved its agriculture appropriations bill for fiscal 2013, which included $2,524 million for the F.D.A., which marked an increase of about $27 million from fiscal year 2012. Included in the bill was an increase of $12.5 million for the implementation of the Food Safety Modernization Act.

Neither the Senate bill nor the House bill considered income from user fees since those monies have no effect on government spending. The House bill authorized the collection of $1,353,925,000 in user fees in fiscal 2013, while the Senate bill recommended $1,385,690,000 in user fees. The F.D.A.’s budget for fiscal 2012 provided for the collection of up to $1,393,366,000 in user fees.

The primary difference between the House and Senate bills with regard to fiscal 2013 user fees was the inclusion in the Senate bill of $19,318,000 in Mammography Quality Standards Act user fees. Also, the Senate bill authorizes the collection of $12,447,000 in export and certification user fees. The House bill authorized the collection of the user fees connected with the voluntary qualified importer program but did not specify a particular level.

While there was a $43 million difference between House and Senate proposals for F.D.A. budget authority in fiscal year 2013, F.D.A. advocates said the House bill nevertheless “was an enormous improvement over last year.”

Steven Grossman, deputy executive director of the Alliance for a Stronger F.D.A., pointed to last year, when the House proposed cutting the F.D.A.’s budget authority by $275 million from fiscal 2011 levels.
“Eventually, the aggregate spending levels (for fiscal 2012) were resolved in favor of the higher Senate numbers, and the F.D.A. netted out a $50 million increase for fiscal year 2012,” Mr. Grossman observed.
That the House Appropriations Committee this year proposed a much higher “bottom line” than it did last year reflected the body’s greater appreciation for the F.D.A., Mr. Grossman said.

Typically, the full House and Senate would debate and pass their appropriations bills, conference to hammer out differences between the two versions, and vote on and ultimately pass a final compromise bill. But this was not a typical year, Mr. Grossman said.

Following a general election, whose outcome is anything but certain, the Bush-era tax cuts will expire at the end of December, as will the 2% payroll tax holiday. Additionally, unless a lame-duck Congress finds a way to reach an agreement on government spending and revenues in an overall plan to reduce the federal deficit, automatic across-the-board cuts in federal defense and domestic program spending will begin on Jan. 3, 2013, under an agreement concluded last summer to raise the government’s debt ceiling. That agreement called for $1.2 trillion in spending cuts over 10 years. The automatic spending cuts have been referred to as a sequester.

Mr. Grossman said if a sequester were to occur, its effect on F.D.A. funding would be swift and painful.
“Suddenly, the available budget authority funding for F.D.A. would go from $2.5 billion to $2.3 billion in fiscal year 2013 (assuming an 8% sequester),” Mr. Grossman said. “Only three-fourths of the year would be left (fiscal year 2013 begins Oct. 1, 2012), making the impact even more severe.”

Mr. Grossman said in response to a threat of a sequester, “From August to December of this year, F.D.A. will need to speed up hiring that is highly specialized to new user fee requirements or which fall into categories for which the agency’s post-sequester needs cannot be met by existing personnel.

Simultaneously, F.D.A. will need to be pulling back on other spending and hiring that would come from budget authority dollars unless individuals involved could also do work that would be paid for by user fees. The objective is clear cut: F.D.A. will be trying to avoid post-sequester layoffs. To ensure this result, we assume that there will also be contingency plans to shift individuals from positions and offices paid for by budget authority and into ones paid for by user fees.”

Mr. Grossman added increases in user fee income would “backfill” the budget authority cuts rather than contribute to real agency growth.

“Despite that, F.D.A. will be obligated to undertake the activities and meet the performance measures as if the new user fee money was paying for additional staff,” he said.
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