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[[underlined]] Federal grants and contracts [[/underlined]] to the Smithsonian Astrophysical Observatory are expected to exceed budget by $1,350,000, primarily related to the NASA space shuttle program; a decrease of $500,000, however, is anticipated in grants to other Smithsonian bureaus.

[[underlined]] FY 1981 - Estimate (Schedule E) [[/underlined]]

--[[underlined]] Federal Appropriation [[/underlined]]: As part of a Government-wide action, OMB will reduce by $1.5 million the Institution's FY 1981 appropriation request submitted to Congress in January.  Recommendations regarding distribution of this reduction are being prepared by the Secretary's Executive Committee.  Hearings on the Institution's FY 1981 Budget Request were held before the House Appropriations Subcommittee on March 11 and 12 and before the Senate Appropriations Subcommittee on March 28.  Final Congressional action on the FY 1981 appropriation is not expected before this summer.

--[[underlined]] Nonappropriated Trust Funds [[/underlined]]: No changes have been made to FY 1981 Trust Fund estimates.  A recommended budget for these funds will be developed for presentation to the Executive Committee of the Regents in August.  In view of increased operating costs and declining net revenues from the National Air and Space Museum Theatres at current ticket prices (50¢ for adults and 25¢ for children), this budget will include an increased rate; net proceeds will be directed to other NASM and Smithsonian programs.  The ticket increase will probably occur at the end of this fiscal year.

[[underlined] ]Smithsonian Tax Matter and IRS Audit [[/underlined]].

As previously reported to the Regents, the Institution submitted to IRS a Request for a Revenue Ruling in November 1977 to clarify present tax regulations as they might apply to the calculation of net advertising income of [[underlined]] Smithsonian [[/underlined]] Magazine.  This was done as part of continuing efforts (since before 1975) to answer the underlying question of whether the Institution as a trust instrumentality of the United States is inherently exempt from "unrelated business" income tax; it was determined at a meeting of the 

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