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Tuesday, August 09, 2011

After debt deal, agencies face budget uncertainties

Now that a debt ceiling deal is struck, agency financial managers are struggling to figure out their budgets for next year and beyond — and planning for the worst.

With the start of fiscal 2012 less than two months away, many experts expect agencies will have to live under a continuing resolution for at least several months past October; some observers expect the renewed prospect of a government shutdown to emerge from the political standoffs in Congress already being anticipated.

Many federal financial planners are preparing for big cuts. Well before the debt ceiling legislation passed last week, for example, Defense Department officials were running scenarios for absorbing several hundred billion dollars in projected spending cuts over the next decade, said a Navy financial manager who spoke last week on condition of anonymity.

The results will be woven into an adjustment of the Pentagon fiscal 2012 budget request that will likely be ready when Congress returns early next month from its August recess, the manager said. On top of long-term reductions already in place, those contained in the debt ceiling law represent "real dollars, real money and real hurt," he said.

At other agencies, the caps on discretionary spending contained in the legislation will likely keep them focused on belt-tightening already underway.

OMB has not yet issued any 2013 budget guidance to agencies, a spokeswoman said.

At the moment, however, lawmakers aren't even close to wrapping up work on the fiscal 2012 budget. Of the dozen appropriations bills needed to keep the government in business, none has been signed into law. The Republican-run House of Representatives has approved only six; the Democratic-controlled Senate, just one. And one of the largest and most politically charged — legislation to fund the Health and Human Services Department — has not moved in either chamber.

Shutdown scenarios will likely accompany the ensuing budget brinkmanship, Lilly said, with the odds of a deal uncertain. For agencies, he added, the process raises "tons" of uncertainties, such as how much money they will have to obligate for grants and contracts. "It also pushes the bureaucracy to more haphazard decision-making, which ultimately is the way we waste money."

-Sean Reilly, FederalTimes.com

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