WASHINGTON — With a funding deadline fast approaching, the U.S. Department of Veterans Affairs on Friday proposed a two-tier plan to cover the cost of the troubled, $1.73 billion hospital project in Aurora.
Under the first part of the deal, the VA would reroute about $150 million from its 2015 budget and use that money to keep construction going until the end of the federal fiscal year, which ends Sept. 30.
The short-term funding is critical because the VA and its prime contractor, Kiewit-Turner, nearly have exhausted all available money for the project. Without a new cash infusion, the project would shut down in a matter of weeks — if not days.
“Now it is time for Congress to act,” VA Secretary Robert McDonald wrote in a letter to lawmakers. “Inaction by Congress will result in a shutdown of the Denver Replacement Medical Center and punish Colorado veterans today for past VA errors.”
A suspension of work nearly occurred last month because of funding problems, but Congress kept the project afloat — temporarily — with a small bump of about $20 million.
Even that deal, however, almost didn’t happen because of a protracted battle between Congress and the VA on how to cover the full extent of cost overruns at the facility.
In March, the VA said it needed $830 million to finish it — a figure that shocked political leaders on the state and national levels. Both sides have been trying to figure out how to pay for it since then.
The VA initially proposed taking money from a $5 billion fund created by Congress last year to improve VA facilities and make the agency more efficient. But that idea was roundly rejected by Congress, as lawmakers outside Colorado raised concerns about how that plan would affect VA projects in their home states.
This time — as the second part of Friday’s two-part funding plan — top VA officials want to pay for the hospital’s completion with a sweeping, across-the-board cut to other VA programs.
It would be small, less than 1 percent, and would apply to the VA’s 2016 budget. It would include discretionary accounts from medical research to the National Cemetery Administration.
It’s uncertain how Congress will react to such a plan. Lawmakers previously have groused about similar ideas — the budget sequestration of 2013 is one such example. But the clock is ticking, and the VA and Congress are running out of options.
The VA also noted in a response letter to Congress that it reduced by $55 million its overall need of $830 million by cutting two buildings: a community living center and a post-traumatic stress residential rehabilitation facility.
One idea, to further reduce the size of the $1.73 billion facility, is opposed by the VA and Colorado lawmakers.
They have argued that work already has begun on most of the medical campus and that further cuts would not be cost-efficient, especially because the Denver region still needs a new facility to take care of veterans.
With the VA plan now out there, Congress has just a few days to make a decision.
“Time is of the essence, and we need to ensure we complete this hospital,” U.S. Sen. Michael Bennet, a Colorado Democrat, said in a statement. “We’ll take a very close look at this plan, and we urge congressional and committee leadership to do so as well.”
But even if lawmakers agree to the proposal, the drama likely wouldn’t end this month.
Because the $150 million is expected to carry the project only through the end of September, and because Congress routinely fails to pass a new budget by its Oct. 1 deadline, it’s a near-certainty that at least one more bridge deal would be needed, although that likely would be tied to broader government funding plans.
The VA funding package also includes a list of reforms to improve how the agency undertakes new construction projects. They center on a better planning and review process.
“We believe that these reforms will allow us to avoid the mistakes of the past and move forward with the construction in Aurora in a manner that will serve the veterans of Colorado and American taxpayers,” McDonald wrote.
Those reforms could be critical in winning support from House Republican leaders, including Speaker John Boehner, who have called for these changes in exchange for funding the Colorado hospital.
Mark K. Matthews: 202-662-8907, mmatthews@denverpost.com or
