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Information about the Congressional Budget Office's Budgetary Treatment of Major Medical Facility Leases of the Department of Veterans Affairs 1 (March 22, 2013)

handle is hein.congrec/cbo11041 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 March 22, 2013 Honorable Jeff Miller Chairman Committee on Veterans' Affairs U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: This letter responds to the request from you and Congressman Michaud for information about the Congressional Budget Office's (CBO's) budgetary treatment of major medical facility leases of the Department of Veterans Affairs (VA). In sum, CBO believes that most such leases are essentially purchases of facilities built specifically for VA's use, and therefore that the costs of acquiring them should be recorded in the budget when VA enters into the lease, rather than spread out over the duration of the lease. VA's Leases of Major Medical Facilities VA is authorized to lease medical facilities under current law, but must receive specific legislative authorization for leases with average annual rental payments in excess of $1 million. The department requests authority for such leases in its annual budget submission, and the Congress provides such authority annually in authorization acts.' VA classifies its leases for major medical facilities as operating leases, and therefore records the resulting obligations (that is, legally binding commitments that will result in outlays) on an annual basis in an amount equal to the lease payments due in that year. Prior to 2012, CBO followed that treatment in estimating the cost of legislation that would authorize 1. The VA Major Construction Authorization and Expiring Authorities Extension Act of 2012 (Public Law 112-191), which was signed into law on October 5, 2012, did not provide authority for any leases of major medical facilities. 2. For further information on the budgetary treatment of operating leases, see the Office of Management and Budget's Circular A-11. Preparation, Submission, and Execution of the Budget, Appendix B.

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