Questions remain about measure to fund agencies until October

House and Senate negotiators are aiming to reach key agreements by the end of next week on a $463.5 billion spending bill for many Cabinet-level departments and dozens of smaller agencies, but some key questions are unresolved.

Drafting a bill to cover nine unfinished spending bills for the fiscal year ending Sept. 30 is proving no easy task, as demands for additional spending pile up while Democrats try to live within the tight budget constraints still in place on the new Congress.

"There is absolutely no way to meet all the needs of the country. But we're going to do our absolute best to meet the priority needs," said a spokesman for Senate Appropriations Chairman Robert Byrd, D-W.Va.

The domestic side of the budget for this year was left unfinished by the Republican-led Congress last year, presenting the Democratic majority in the 110th Congress with major logistical and policy decisions. Republicans passed a continuing resolution extending most government operations, save the military and homeland security budgets that were completed, until Feb. 15.

Democrats might bring their year-long "joint funding resolution" to the House floor as early as the week of Jan. 29. But Senate Democratic leaders might wait until the week before the deadline to act, to prevent extended debate and possible amendments that might send the measure back to the House.

Democrats want most of the pieces in place before Feb. 5, when President Bush sends his new budget to Capitol Hill. That package and a supplemental spending bill of about $100 billion for Iraq and Afghanistan are likely to consume months of debate.

House and Senate appropriators are mounting a major effort to come up with offsets for additional spending. House Appropriations Chairman David Obey, D-Wis., has directed his staff to see how much money could be captured by eliminating earmarks in fiscal 2007 bills, as he and Byrd have pledged. As much as $6 billion might be available, according to preliminary estimates.

But sources said aides have had difficulty determining what earmarked funds can be redirected to other programs across the government, as some programs -- wastewater infrastructure grants and Army Corps of Engineers construction, for example -- run mainly on specific line-items.

There is also the question of how to define an earmark and separate it from other spending. "They're all grappling with the question [the Government Accountability Office] has been wrestling with for years: What is an earmark?" said one source familiar with the discussions.

More easily captured is money for programs funded at a higher level in the fiscal 2007 bills than contained in the president's request, such as Export-Import Bank subsidies. Also readily available are funds rescinded from previous appropriations. In the remaining fiscal 2007 bills, House Republicans last year included as much as $6.5 billion in rescissions, and the Senate utilized nearly that much.

Democrats are unlikely to approach that total, as they have already registered their dislike of certain provisions. For example, there is a $325 million rescission in the House Labor-Health and Human Services bill from grants to local communities for aid to workers laid off due to plant closings or other unforeseen events. But areas of agreement might include cutbacks of economic aid to Egypt.

Justice Department programs are also a perennial source of rescissions, with each chamber coming up with more than a half-billion dollars in fiscal 2007 savings from areas like unspent balances in the agency's asset forfeiture fund. Major savings might also come from transportation and housing accounts, where both House and Senate bills rescinded about $2.4 billion from highway and aviation programs, and another $2 billion from unspent housing voucher funds.

Democrats plan to fund most agencies and programs at last year's enacted levels. That leaves around $3 billion for them to redirect to favored programs -- not nearly enough to make every agency whole and still comply with the Republican budget limits.

One area of agreement is the need to boost veterans' health spending by $3 billion. Pentagon officials argue another $4 billion is needed for housing and other construction projects, while $700 million is needed to meet the healthcare needs of active-duty military personnel. Social services and health research funds are down about $3 billion from two years ago when adjusted for inflation; state and local law enforcement is cut roughly $2 billion below fiscal 2001.