FEDERAL AGENCIES:

Agencies paralyzed by fiscal cliff, endless succession of CRs

So far this year, U.S. EPA has frozen hiring, delayed contracts and sharply curtailed travel, all to deal with the uncertainty of its future budget.

It's not only the so-called fiscal cliff -- with its scheduled across-the-board budget cuts -- that has hampered EPA's operations. Instead, it is an action that has become so routine in recent years that all federal agencies have become experts in handling it: the continuing resolution.

And this year, lawmakers seem likely to take it a step further, passing a CR for the entire fiscal year, thanks to fiscal cliff negotiations and a slew of other priorities that have moved the budget to the back burner.

Experts agree that CRs are bad for business and efficiency. They delay projects, paralyze long-term planning -- in government and the private sector -- and create a cycle where federal agencies keep tight purse strings at the beginning of the year only to go on a spending spree toward the end.

But such measures are most detrimental, they say, because of the uncertainty of what comes next. Will an agency's budget get cut? Will it get a boost? Will lawmakers fund certain projects and ignore others?

The bottom line, these experts argue: If Congress is going to pass a yearlong CR, it should do so now, not wait until the current CR runs out in March.

A CR "really hamstrings the agencies and makes them really ineffective and inefficient," said Steve Ellis, vice president of the watchdog group Taxpayers for Common Sense. But "if you do a yearlong CR, they at least know what the top line number is. You actually have some predictability."

Budget planning paralyzed

Agencies keep their budget plans and spending habits close to the vest. But it's clear that the CR -- coupled with an impending sequester -- has paralyzed budget planning.

EPA, for example, directed its programs and regional officials earlier this year to hire only one employee for every two who leave, citing a "very constrained" budget that could get more challenging. The new policy meant some offices, with little left in their budget, couldn't hire at all.

"The fiscal picture for FY 2012 is very constrained and we expect FY 2013 to be very challenging as well," EPA Deputy Administrator Bob Perciasepe wrote in a memo at the time. "Given these continued concerns, it is important to plan for some flexibility within the overall staffing levels to meet the agency's mission and priorities."

His prediction proved accurate: Congress has passed a CR through March, effectively freezing EPA's budget. And such actions have agencywide repercussions, according to Tom Link, executive director of the EPA chapter of the American Federation of Government Employees.

For one, hiring freezes result in vacant positions as more and more baby boomers retire, leaving remaining employees to pick up the slack for high-level positions. Otherwise, work and research is put on hold.

Travel and training also are put on the back burner. EPA scientists, he said, "cannot attend international conferences to share knowledge, and present research findings, if budgets do not include travel dollars."

EPA also does not renew contracts that end during a CR. The agency relies on major research corporations to help with health effects research, Link said; without them, EPA scientists may be unable to complete projects.

Similar problems plague the National Park Service. Without knowing the future budget, officials cannot plan for how many seasonal employees they will be able to hire or what contracts they can fund. They must save the funds they have for fixed costs, such as maintaining parks.

This year, officials are being "extremely conservative because of the unknown," said Joan Anzelmo, a board member of the Coalition of National Park Service Retirees.

"The National Park Service, like all federal agencies, unfortunately has lots of experience with operating on a continuing resolution because year after year after year, no budgets have been passed," said Anzelmo, who retired last year as the superintendent at Colorado National Monument.

But she added that the situation this year is even more uncertain because of the impending sequester, which Anzelmo called "perhaps the greatest risk that national parks have ever faced." The coalition warned last week that if Congress did not avoid the sequester -- across-the-board budget cuts of more than 8 percent -- the Park Service would likely have to eliminate thousands of seasonal park ranger jobs and shut down some parks (Greenwire, Dec. 12).

"The effects of the unknown have sort of pressed paused on projects across the country, on hiring and on different sorts of programming that would normally happen," Anzelmo said, later adding: "The sooner the agencies know what they are going to operate under for the year, the better and more efficient job they can do."

Energy and environment agencies see longer delays

But in recent years, efficiency has been the exception, not the rule. And that has made agencies experts at handling uncertain budgets.

"The agencies just get good delaying spending," said Patrick Lester, the director of fiscal policy at OMB Watch. "Then you have the well-known spend-down toward the end of the fiscal year, once the agencies know what actual budgets look like. They have to catch up because they actually have to spend that money before the year ends."

Indeed, Congress' penchant for passing late budgets has caused the government to spend more as agencies delay hiring, engage in short-term contracting and continue programs that have outlived their effectiveness, according to a recent report from the IBM Center for the Business of Government.

The report -- written by Philip Joyce, a professor at the University of Maryland School of Public Policy -- concludes that even though agencies now expect to begin their year with a CR, such measures are still costly.

That is the result of shorter-term contracts, delayed maintenance, decreased efficiency and host of related consequences. Contracts may include a "risk premium," for example, because of the uncertainty that a contract will be continued.

Costlier still: multiple, short-term CRs that drag out far into the fiscal year.

Energy and environmental agencies suffer more than some other federal departments, according to the report. The energy and water spending bill, for example, is an average of 71 days late, while Interior appropriations are 69 days late. In contrast, agencies under the jurisdiction of the Homeland Security and Defense subcommittees experience, on average, less than a month of delay.

But longer-term CRs also create their own problems, according to the report. They can force agencies to make big changes in the last few months of a year.

"The end result is that an agency receiving its final appropriation six months into the fiscal year may only have three or four months to execute that budget," the authors wrote. "This can make it literally impossible to hire staff, negotiate contracts process grant applications or make other changes to the status quo before the end of the fiscal year."