215


 BUDGET IMPACT OF CHANGE IN U.S. ROLE IN PANAMAI
 [in millions of dollars

 Before
 Fine treaty After treaty Difference

 1. Expected budget impact:
 2. Annual requirements:2
 3. Net payment to Republic of Panama 3 --------1. 8--------------- -1. 8
 4. Panama Canal Company (commission)4------------------ 1.6 1.6 ------5. Canal Zone Government5a------------------------------ 3.0--------------- -3.0
 6. Payment of interest on U.S. net investment6---------20.1----------20. 1
 7. Civil Service Commission early retirement program - - -9. 2 9. 2 8. Incremental requirements for DOD Schools/hospitals 8 --------3.2 3. 2
 9. Assumption of base support function by DOD- ------------------------- NA NA
 10. Total estimated annual requirements ------------------ -13. 7 14. 0 27.7
 11. 1-time requirements:
 12. Relocation of defense installations in --------------------------------- 42.9 42. 9
 13. Transfer to health and function to DOD 11 --------------------- 21. -10.5 2. 1-10. 5
 14. Transfer to Panama social security system of civil service
 contributions of employees of the Canal enterprises 12 -------- (6-35. 0) (6-35. 0)
 15. Purchase of retirement benefits for Panamanian employees of DOD nonappropriated fund activities 1---------.......3. 0 .0
 16. Preliminary estimates of 1-time rqieet------------- 48. 0-56. 4 48.0-56.4
 17. Contingent liabilities:
 18. 1-time items:
 19. Panama Canal Commission, new borrowing authority 14----------- 40. 0 40. 0
 20. Total 1-time contingent liabilities--------------------------------- 40.0 40. 0
 21. Estimated 1979-99 requirements 15 --------------------- $629, 700, 000 to $638, 100, 000
 21a. Estimated total requirements 16 --------------------- $712, 500, 000 to $720, 900, 000
 22. 1979-99 contingent liabilities resulting from treaties 17- --...... $40, 000, 000

 1 It should be noted that this chart was updated on February 26 by the Senate Budget Committee staff. New material is based on CBO and administration estimates.
 2 Expected impact taken from fiscal year 1979 President's budget, unless otherwise noted. This table explicitly assumes that the treaty payments to the Republic of Panama are paid out of Canal Commission revenues and the Commission is self-sustaininp. No adjustment is made for inflation in the future.
 3 Net of $500,000 reimbursed to the Treasury by Panamna Canal Company.
 4 This cost represents changes in the company's fund balance with the Treasury which fluctuate from year to year. In recent years the fund balance has been increasing not decreasing. Should the Commission take a corporate form these fluctuations would likely continue with little net effect over the Treaty period.
 5Canal Zone Government costs represent changes in fund balances and unrecovered capital appropriations. Capital appropriations are repaid over the useful life of the asset required. Cost savings in this line are partially offset by increased capital costs in line 8 and 12 for equipment purchases and repairs to schools and hospitals absorbed by DOD
 6 Assumes requirement for this interest payment will be deleted by implementing legislation, as proposed by the administration. In recent years, annual interest payments have averaged between $18,000,000 and $20,000,000.
 7Civil Service Commission estimates the unfunded liability created by an early retirement plan would be $148,000,000. $9,200,000 represents the annual payment necessary to amortize the unfunded liability over 30 yr.
 8The $3,200,000 estimate includes $1,500,000 for DOD contribution for employee health benefits, $1,400,000 recurring capital investment in buildings and equipment, and $300,000 net cost of educating dependents of canal enterprise employees transferred to DOD. This does not include any additional hospital costs DOD may absorb after the 3d yr as the population being served is halved and the reimbursable population is reduced even more. The magnitude of any additional costs depends on the extent DOD is able to reduce fixed costs in relation to the reduced population.
 9 NA-Not available at this time. Administration estimates are underway.
 10 Preliminary estimates used by Lieutenant General McAuliffe, in testimony before Senate Armed Services Committee, Jan. 24, 1978.
 11 This estimate assumes that the medical evacuation helicopters and the dental clinics being considered by DOD are one-time costs attributable to the assumption of hospitals and schools by the DOD. The other construction and equipment costs appear to be routine replacement and repair items which will recur through the treaty period. An allowance for these costs is included in line 8 with no assumption on the timing purchases being made.
 12 The preliminary DOD estimate of $3,000,000 to $17,500,000 for this line includes only the U.S. matching contribution. The withdrawal of both the employee contribution and the matching U.S. contribution are outlays in the year when withdrawn. Costs, therefore, are double the DOD estimate. Only the payment of the U.S. will require enabling legislation and apprpitions. All withdrawals represent payments made in previous years to the civil service retirement fund and elimiat future liabilities to employees withdrawing their funds. Conceptually, this payment will substitute for future payments and should not be added to the 20 yr total, line 21.
 13 Preliminary DOD estimate. These employees are not covered by the U.S. civil service retirement system. Some are enrolled in commercial retirement plans.
 14 Assumes new borrowing authority will be included in implementing legislation. Canal Company has $40,000,000 borrowing authority under current law, which administration proposes to continue under Canal Commission. Under the assumption of a self-sustaining Commission, the borrowing authority would not be drawn upon.
 15 Based on 21-yr cost difference of annual items plus known one-time costs. No adjustment for inflation in annual costs were made. Only lines 5, 8, and 8a are affected by inflation.
 "Same as line 21 with the additional 9 yr payments to the civil service retirement fund.
 17 Assumes that the contingent liabilities proposed in the $345,000,000 foreign aid package do not represent an increase over current overall levels for these programs.