VA secretary: Budget woes won’t affect new projects

Benjamin Grove

Tuesday, June 28, 2005 | 11:03 a.m.

WASHINGTON -- A $1 billion budget shortfall disclosed last week by the Veterans Affairs Department will not endanger new construction projects, Department Secretary James Nicholson said today.

Nevada lawmakers are seeking assurances that the shortfall will not slow development of the planned $295 million medical complex in North Las Vegas. Groundbreaking is planned for next year with a scheduled 2009 opening.

To cover the $1 billion shortfall the department plans to use $375 million from a fund that was expected to "carry over" surplus money in the next fiscal year, which begins Oct. 1, Nicholson told lawmakers in separate House and Senate hearings today. The department plans to take another $625 million or so from a capital improvement fund and defer spending on maintenance and equipment purchases, Nicholson said.

House Appropriations veterans affairs subcommittee chairman James Walsh, R-N.Y., specifically sought clarification that no new construction projects would suffer.

"That's correct," Nicholson said.

But questions remain about whether the budget shortfall could hurt construction projects in future years, and about how maintenance and equipment cutbacks could hurt veterans hospitals and clinics in the department's sprawling and complex health care system.

A spokesman for the Southern Nevada veterans health care system was unavailable to discuss potential maintenance and equipment cutbacks in Clark County's clinics.

Several lawmakers sharply challenged Nicholson's assertion that veterans health care would not suffer this year. Rep. Chet Edwards, D-Texas, said he "could not disagree more strongly." Maintenance and equipment cuts directly affect patient care, he said.

Nicholson was grilled by two panels of angry lawmakers from both parties who are frustrated that Nicholson's department did not disclose this year's shortfall -- now estimated at between $1 billion and $1.6 billion -- until late last week.

Lawmakers are now scrambling in the middle of the appropriations process to add more money to the VA's budget. The shortfall is about 3 percent of the department's budget, Nicholson said.

Lawmakers are also seeking answers to how the shortfall could affect future year budgets and VA health care in their districts. Answers have not yet been forthcoming from the department.

"That's why we're having this hearing," Sen. John Ensign, R-Nev., said shortly before a Senate Veterans Affairs Committee hearing where Nicholson testified.

In opening remarks in the hearing, panel member Ensign specifically sought an assurance from Nicholson that the North Las Vegas project would not be slowed.

Ensign also told Nicholson that his department should look for ways to spend money more efficiently. Ensign left the hearing for another appointment before Nicholson could respond in his testimony.

In response to other pointed questioning, Nicholson said that the budget shortfall became clear over several months as White House and department budget officials crunched numbers, even though Congress did not hear of it until Thursday.

"It was evolutionary," he told the House panel. "It wasn't some bolt of lightning. There's no element of surprise in this."

But lawmakers said they were very surprised, and upset it wasn't disclosed sooner.

"I don't know how you could not foresee such a huge shortfall in funding," Sen. Patty Murray, D-Wa., said.

Nicholson said he did not see the department as "in trouble" or in "crisis" as several lawmakers suggested it was. He said the proposed budget fixes would fill the gap for this year.

Nicholson said actuaries had miscalculated a number of factors, including how much reservists now accessing VA care would cost the system. He said they also miscalculated how much dental care would cost.

And the department miscalculated the cost of returning service members from Iraq and Afghanistan, Nicholson said. Actuaries predicted a 2.3 percent in annual growth of patients in the current fiscal year, and it has been 5.2 percent. The 2005 budget assumed 23,553 new patients who were veterans of the war on terror, but the number is more accurately estimated at 103,000, Nicholson said.

More than 275,000 service men and women are currently deployed around the world, Stephen Jones, principal deputy assistant secretary of defense for health affairs, said in House testimony.

Plans for the new medical complex at Pecos Road and the Las Vegas Beltway include a 90-bed hospital, a 120-bed nursing home and an outpatient clinic. Nevada lawmakers intensely lobbied the Veterans Affairs Department for the project, arguing that the Las Vegas Valley's rapidly growing veterans population was worth the investment.

Nevada has one of the fastest-growing populations of veterans, according to Veterans Affairs Department statistics. The veterans population in Nevada has risen 30 percent since 1990. Veterans are now roughly 16 percent of the state's adult population, according to the 2000 Census. Only Wyoming has a slightly higher rate.