User Fees Boost Agency Budgets

Twenty-seven federal agencies have increased or maintained their reliance on user fees for funding since 1990, a recent General Accounting Office report has found.

Federal user fees like trademark registration fees and park entrance fees provided the United States government with $196.4 billion in revenues in fiscal year 1996, the report said.

GAO surveyed 27 agencies where public fees represented 20 percent or more of their funding and found that fee collections were becoming an increasingly important part of the federal budget.

"User fees have grown steadily since the early 1980s and have played several roles in the federal budget," the GAO found.

Agencies that rely on user fees often find their congressional appropriations cut. The Securities and Exchange Commission saw its appropriations drop 8.3 percent between 1991 and 1996. However, because of user fees, the agency's budget actually grew 12 percent over the same period.

Fees finance new agency spending by replacing or supplementing agency appropriations capped by deficit reduction agreements like the Budget Enforcement Act of 1990. According to the report, user fees have also fostered "more business-like practices" in the government by making some agencies entirely reliant on fees to finance their operations.

For example, in fiscal year 1991, the Federal Communications Commission received less than 1 percent of its new funding from user fees. However, by fiscal year 1996 user fees made up 73 percent of the agency's budget.

Fee-reliant agencies, the report found, face management issues not faced by those that depend primarily on general fund appropriations. Fee reliance raises expectations that the agencies will be self-supporting and "thus prompts questions about the applicability of market or business-like principles to their operations."

For example, if a fee-reliant agency experiences a downturn in income, management is faced with making personnel and procurement reductions to save money.

"Balancing these with other issues, such as accountability to Congress and the general taxpayer, will be a continuing challenge," the GAO found.