Both the Senate and House versions of the Department of Homeland Security (DHS) appropriations bill provide over $29 billion in discretionary spending for fiscal year (FY) 2004 and are generally consistent with the President's strategic priorities for dealing with global terrorism. In reconciling the two measures, Congress must ensure that key initiatives are not shortchanged. Conferees also should resist the urge to "over help" with unnecessary earmarks that limit the DHS's ability to focus on the most critical needs or "overload" it with additional dollars for programs that cannot profitably use them.

Overall, federal homeland security spending increased by some 240 percent after the September 11 attacks. To harness these resources, the Homeland Security Act of 2002 consolidated a plethora of agencies, programs, and facilities into a single department. This year, the DHS was funded by the budgets of these agencies. In February, the President proposed the department's first consolidated budget, requesting about as much for homeland security as he did for FY 2003. Stabilizing funding at current levels appears prudent. While enormous security challenges remain, allowing the many agencies involved some time to absorb these large increases makes sense.

Though the Senate and House bills are consistent with the President's request, conferees should take the following actions to build a better homeland security architecture:

• Increase spending on Coast Guard modernization
  The U.S. Coast Guard has emerged as a key homeland security instrument, and the demand for its assets is far greater than previously appreciated. Even before September 11, its fleet was old, expensive to operate and maintain, and ill-suited for some homeland security missions. The Coast Guard intended to replace its equipment through Integrated Deepwater, a long-term modernization program requiring a budget of $579 million for FY 2004, but the House has proposed only $530 million. Meanwhile, the service's increasing operational tempo and expanding mission are likely to wear out the fleet faster than anticipated, slowing modernization even further. To keep the Coast Guard's acquisition program on track, the conferees should adopt the Senate's proposal to spend $702 million on Deepwater in FY 2004.
• Consolidate funding for state and local governments
  The President's budget proposal would consolidate several disparate federal grant programs under a single organization within the DHS, reducing the number of entry points and requirements for state and local governments. Bundling grants would also allow the DHS to focus resources on reducing the greatest risks and vulnerabilities. Both bills, however, disperse grants and management authority to different directorates. This is a mistake. Separate programs, such as firefighter or emergency management planning grants, should be abolished, and the entire grant program should be placed under the Office of State and Local Government Coordination.
• Target critical needs
  It is essential to get federal assistance promptly to the local emergency responders and counterterrorism assets that are protecting the nation's priority high-risk and most vulnerable targets. Both bills have different measures that recognize this. The compromise legislation should adopt the most stringent requirements for quickly announcing grants, mandating that 80 percent of funds given be allocated to local governments and distributed as rapidly as possible. It should also contain a strong sense of the Congress that money should be targeted against the greatest threats and primarily support areas of high population density. Congress should also express its intent that the DHS create national standards for emergency preparedness, adopt a performance-based system, and establish the means to measure readiness and the effectiveness of funds spent.
• Support robust research and development
  The technology needs of homeland security are enormous, and unlike research in defense, there is virtually no infrastructure to bring technologies from development to deployment. In some areas, the DHS will have to create new research and development (R&D) capabilities. The conferees should adopt the House proposal for a DHS R&D portfolio of $1.1 billion rather than dumping all of the R&D workload on the newly created Homeland Security Advanced Research Projects Agency.
• Give the TSA time
  The Transportation Security Administration (TSA) was established shortly after the September 11 attacks and almost immediately was transferred to the DHS. The TSA has many demanding priorities and needs time to establish solid operational practices and stabilize its organization and workforce. The House should follow the Senate's lead and remove unnecessary earmarks from the TSA appropriation.
• Take a cautious approach to information technology
  Cutting-edge information technology (IT) is key to getting the most out of the new department. But buying too much technology too fast, without an established information architecture and a clear understanding of requirements as well as safeguards for security and privacy, could cause IT costs to balloon out of control. Many of the reporting provisions and restrictions in both bills are appropriate, but overly restrictive measures, like the Senate restraint against testing the CAPPS II program that will screen airline passengers for terrorists, should be removed because they are counterproductive and could prevent efficient development of critical new capabilities.

Conclusion
The FY 2004 appropriations bill is critical to the nation's security. Providing sufficient funding for homeland security efforts over the next year is important, but equally essential are the policies, procedures, and precedents in the legislation that will shape the evolution of the nation's domestic security architecture in the years ahead. Beefing up key initiatives such as Coast Guard modernization and R&D funding and better managing support for state and local governments can improve the appropriations bill. Resisting imprudent add-ons and unnecessary earmarks is also crucial.

Once a firm foundation for the nation's homeland security architecture is established, increased funding may be needed in future years. There is little room for complacency in the face of global terrorism in the 21st century.

James Jay Carafano, Ph.D., is Senior Research Fellow for National Security and Homeland Security in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.