Agencies should plan for 10 percent budget cuts, OMB says

Federal agencies must plan for cutting up to 10 percent of their budgets in fiscal 2013, according to new instructions from the White House.

Federal financial officers have been told to submit agency budgets for the next fiscal year that are 5 percent lower than the current level, along with an additional 5 percent of suggested cuts.

“Your overall agency request for 2013 should be at least 5 percent below your 2011 enacted discretionary appropriation,” Jacob Lew, director of the Office of Management and Budget, wrote Aug. 17 in a memo to department and agency directors.

John Gage, president of the American Federation of Government Employees, warned that the cuts would mean more job losees. Read related story here.

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“Your 2013 budget submission should also identify additional discretionary funding reductions that would bring your request to a level that is at least 10 percent below your 2011 enacted discretionary appropriation,” Lew added.

“I know this will be a difficult year, but it will also offer an opportunity to make the hard decisions to invest where we can get the most done and pare back in other areas,” Lew wrote.

An agency’s plans for 5 and 10 percent reductions should be itemized rather than across-the-board reductions, Lew added. They shouldn't include any proposals to reduce mandatory spending, reclassify discretionary spending to mandatory or enact new user fees. Such proposals may be submitted separately, he added.

The budget cuts are necessary under the Budget Control Act of 2011 approved by Congress and President Barack Obama as part of the legislation to raise the U.S. debt limit. The new law sets a target of $2.4 trillion in deficit reduction over the next 10 years.

The president’s goals are to “cut waste and reorder priorities” to achieve the deficit reduction goals, while also investing in areas critical to job creation and economic growth, Lew wrote.

To support Obama's goals, agency heads should identify programs that offer the best opportunities to enhance economic growth, the memo said.

“Finding the savings to support these investments will be difficult, but it is possible if budgets cut or eliminate low-priority and ineffective programs while consolidating duplicative ones; improve program efficiency by driving down operational and administrative costs; and support fundamental program reforms that generate the best outcomes per dollar spent,” Lew wrote.

The memo asked that federal agency directors deal with the following:

• Identify spending critical for positive economic growth.
• Identify cost-saving efforts to improve operational efficiency with program integration, reorganizations, and realignment of resources (such as IT, facilities and staff) to improve service delivery to the public.
• Explain how your agency will acquire and use data to improve policy and operational decisions.
• Identify duplicative programs suggested by the Government Accountability Office and other agencies.