OMB Tells Agencies To Reduce Funding Requests

The tough budget environment that lies ahead for agencies like NASA, NOAA and DOD that are part of the government’s discretionary spending became clear in the annual budget guidance put out by the White House Office of Management and Budget (OMB) Wednesday.

OMB issues guidance to all the federal departments and agencies about this time each year as they prepare to submit their funding requests to OMB for review. The federal government’s fiscal year (FY) is from October 1 – September 30. FY2011 is coming to a close and Congress is debating the request for FY2012. The President’s budget request for FY2013 should be submitted to Congress on the first Monday of February 2012.

Between now and then, the departments and agencies must submit and defend their budget requests through the OMB, which determines how much will be contained in the President’s request to Congress. High level issues that cannot be resolved at the OMB level are sent to the President. Typically, agencies submit their budget requests to OMB in late August or early September, OMB replies by issuing its “pass back” around Thanksgiving, and the two negotiate over the final numbers between then and when the budget goes to Congress.

Telling agencies to submit requests that are less than what they previously expected is also fairly standard procedure in recent years unless they are given an exemption. Typically they are told to request five percent less than a certain amount and to also show what the impact would be of a 10 percent cut. That is true this year as well. The key is what base year is used.

Last year, the OMB guidance for FY2012 budget requests was to cut five percent from what OMB projected for FY2012 in the FY2011 request. In NASA’s case, for example, in the FY2011 budget request OMB projected $19.45 billion for NASA, so the OMB guidance required the agency to submit a request five percent less than that. Whatever NASA requested is not public, but the end result was a President’s request to Congress of $18.72 billion, the same as what the agency received in FY2010 and an increase of $27 million above what Congress provided for FY2011 ($18.45 billion)

This year’s guidance, however, tells agencies to submit requests that are five percent less than what they received for FY2011. For NASA, that means five percent less than $18.45 billion, or $17.52 billion. In its FY2012 request, the agency assumed a level budget of $18.72 billion per year for the next five years. Agencies must also show the impact of a 10 percent cut from the FY2011 enacted level, which in NASA’s case would be $16.6 billion.

The OMB guidance is just that, guidance, and the beginning not the end of the negotiating process within the administration for what will be included in the President’s FY2013 budget request to Congress. It is indicative, however, of the extremely constrained budgetary environment that all discretionary agencies are facing as Congress and the Administration strive to reduce the deficit. Knowing at least in general terms how much money will be available in future years is especially important for agencies like NASA, NOAA and DOD that are involved in projects that take many years to execute like building and launching satellites.