Appropriations: Agencies getting used to ‘circus’ on spending

George Cahlink, E&E reporter • Posted: Tuesday, September 13, 2016

The federal bureaucracy will soon be dealing with the impact of lawmakers failing to finalize spending negotiations before the new fiscal year begins on Oct. 1. As congressional leaders wrestle with the politics of a new appropriations plan, departments will have to wait for new money.

The reality is not new for agencies, like U.S. EPA and the Interior Department, because Congress has rarely finished its annual appropriations work on time over the past two decades.

Instead, those agencies have come to expect they will spend the first three months of the fiscal year operating under a continuing resolution that keeps funding at current levels.

“The agencies have become pretty familiar with this circus. They understand this is a possibility. I don’t think anyone expected anything else,” said G. William Hoagland, a former Senate Budget Committee director who now serves as a senior vice president at the Bipartisan Policy Center.

Indeed, there’s widespread agreement Congress will pass a continuing resolution over the next few weeks to keep government running until mid-December.

Yesterday, Senate Majority Leader Mitch McConnell (R-Ky.) launched the process of moving forward with H.R. 5325, the legislative vehicle for a CR. While the language has yet to emerge, it would likely keep agencies operating under current spending levels — with the exception of some tweaks — until December.

But the structure of any final funding agreement during the lame-duck session for the remainder of the fiscal year is as uncertain as the makeup of the future president’s Cabinet. For federal agencies, that means at least a few months of fiscal uncertainty, and maybe much longer.

An omnibus

The best scenario for federal agencies, in the absence of stand-alone spending bills, would be for Congress to return after the elections and pass a catchall spending bill, known as an omnibus.

For agencies, it would mean getting fresh funding for fiscal 2017, albeit a few months late, including dollars to start new initiatives.

Congress passed an omnibus last year that provided fresh funding to all agencies. It also revised budget caps to allow lawmakers to spend $1.070 trillion for discretionary programs for the coming year.

It seems likely lawmakers will stick to that figure in an omnibus rather than reopen what were arduous budget talks last fall.

Agencies would see almost no increase in spending in the omnibus. The $1.070 trillion level is $3 billion over fiscal 2016 spending.

Such a plan would not allow much money for several big-ticket items, including clean energy and climate change initiatives the Obama administration has advocated as a way to cement its environmental legacy.

Democrats and the White House have signaled they will support an omnibus as their best bet for securing long-term domestic spending this year under a GOP-controlled Congress.

Senate GOP leaders and appropriators tend to lead toward an omnibus, too, saying it would allow the current Congress to finish its work and give the next one a fresh start on its spending work.

Moving minibuses

But conservatives, particularly in the House, have balked at moving an omnibus during the lame duck. They worry about a lame-duck Congress approving controversial policies and more spending.

“Lame ducks aren’t healthy ducks. Nothing good comes out of a lame duck,” said Rep. Dave Brat (R-Va.), who joins many members of the House’s hard-line Freedom Caucus in opposing an omnibus.

Instead, many House Republicans want to combine three or four of the annual spending bills into a series of smaller packages, known as minibuses, to move them at the end of the year. They say minibuses are more politically palatable then a single catchall bill and would be easier to amend.

“When we break it down and do a national security minibus or a financial service minibus, it’s easier for people to understand and you can pull out some stuff you may or may not want on there,” said Rep. Markwayne Mullin (R-Okla.).

Rep. Ken Calvert (R-Calif.), chairman of the House Appropriations subcommittee with jurisdiction over Interior and EPA, said moving minibuses could be a “good thing” and said he could see his panel’s bills making it into one of the packages.

For the bureaucracy, a minibus strategy could lead to some agencies getting fresh funding and others being left out. Democrats and Republicans would have less leeway to extract concessions from each other compared to debating one large bill.

Hoagland said he does not see congressional Democrats or the White House going along with a minibus strategy unless there is some kind of agreement to move both defense and domestic measures in tandem.

‘Balancing act’

Jim Dyer, a former House Appropriations staff director now with the Podesta Group, says any minibus strategy will be a “balancing act.”

Dyer, like Hoagland, said it will require marrying defense spending bills with less popular domestic measures. “If you don’t do it right, you can deal yourself out,” he added.

Rep. David Jolly (R-Fla.), an appropriator, said he was not expecting any final decisions on omnibus versus minibuses until December.

“The best guess from me is we come back after the election and put a [final decision on spending] in the context of who the president-elect is,” Dyer said.

Sen. John Cornyn (R-Texas), a member of the Senate GOP leadership team, told reporters yesterday: “I don’t think that’s been decided yet.” He said minibuses would be “preferable” to an omnibus.

Cornyn said debate on the short-term CR through December will likely begin once the Senate is done with water policy legislation.

Cornyn said talks were ongoing about providing funds to fight the Zika virus. He said it would “be nice” for lawmakers to pass a yearlong military construction and veteran affairs bill now.

“The problem is the Democrats don’t seem to want to do anything past Dec. 9, at least to my knowledge, because they want to maintain maximum leverage to negotiate after the short-term CR,” he said.

Sen. Barbara Mikulski (D-Md.), ranking member of the Senate Appropriations Committee, told reporters last night, “We’re kind of where we were when the weekend began,” pointing to talks on Zika, Securities and Exchange Commission issues and the Export-Import Bank.

‘No consensus’

Some observers, however, are already predicting Congress will come back and punt the spending work until the next Congress. Conservatives would be happy with that.

It would be an unpopular scenario for federal agencies, which would not receive any new funding until at least next spring or longer. An impasse on spending in 2011 and 2013 forced most agencies to operate under a full-year CR.

Stan Collender, a budget expert who serves as executive vice president with the MSLGROUP, is all but certain that Congress will punt on spending.

“There is no consensus for an omnibus or minibuses,” Collender said. “What it means for the agencies and their managers is nothing good. They constantly will need to be adjusting their spending.”

Most lawmakers are not ready to say they will punt work until the next Congress, and several worry about how a long-term CR would affect the military. In 2011 and 2013, Congress did provide fresh spending for the Pentagon.

Agencies could get some relief under a CR if Congress agrees to allow some anomalies or tweaks from current levels and authorizations.

The White House has outlined several pages of anomalies it would like in the short-term CR, including $4 million for EPA to implement an updated chemical safety law, authority for national parks to continue collecting various fees and upfront spending to help the Bureau of Land Management cover a drop in drilling revenues because of low oil prices.

Yesterday, President Obama met with Democratic and Republican congressional leaders. Both sides appeared optimistic about reaching agreement on key priorities.

“There are also significant other areas of the country that are suffering from everything from wildfires to the situation in Flint, which is still unresolved,” said the president after the meeting. “So we discussed strategies where we might be able to make a difference there.”

Reporter Geof Koss contributed.