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Senate appropriators have declined a request to shift $42 million to address a budget shortfall at the Federal Protective Service.

In a July 20 letter, Sen. Judd Gregg, R-N.H., chairman of the Senate Appropriations Homeland Security Subcommittee, said he was disturbed that the Homeland Security Department's June 30 request did not acknowledge the "continuing fiscal year 2007 financial crisis for FPS."

"Any alternative proposal to provide additional funding to FPS in fiscal year 2006 must contain proposals to address shortfalls in fiscal year 2007 as well," the letter said.

Gregg also said he was "deeply dismayed at the lack of responsibility shown by the department in delaying until the last possible day the submission of this request to the subcommittee." That did not allow time to "weigh alternatives or engage in a wider discussion of possible solutions," he wrote.

The requested shift would have drawn money from areas including explosives detection and detention of illegal immigrants.

One official at FPS, speaking under the condition of anonymity, said the budget shortfall was caused by a combination of late payments from agencies and too small of a staff to adequately collect late bills. FPS, which provides security for federal buildings around the United States primarily through contract guards, is an "accounts receivable" agency. That means other agencies must reimburse it for its services.

The source said FPS in recent months repeatedly lobbied Immigration and Customs Enforcement, the DHS agency within which FPS is housed, to help resolve its financial woes, to no avail. In addition, FPS sought the Office of Management and Budget's help in raising fees. OMB rejected the requests, the FPS source said.

"We're not going to be able to pay our vendors," the FPS source said. "All these companies will be screaming at their congressmen saying they never got paid," the source said, adding that "hundreds of complaints" of late payments by FPS have been received already.

Currently, FPS is paid about 35 cents per square foot secured, the source said. The source estimated that the agency would have to raise fees to about 57 cents per square foot secured, in order to overcome its funding shortfall. The FPS source expressed frustration over the agency's increasing workload and inability to collect fees -- after Sept. 11, it was required to nearly quadruple its security contracts from 4,000 to 15,000, with a staff of less than 1,500 employees.

The FPS source said the agency is nearing bankruptcy, but will remain able to pay employees because contract funds and payroll funds are separated.

"It's going to take another terrorist attack on a federal building" before the security service becomes better equipped, the source predicted.

But the conclusion of Gregg's letter to Chertoff may indicate a growing willingness to allow FPS to explore fee increases.

"The department is encouraged to explore options to address the shortfall in FPS including agreements with the Office of Management and Budget and GSA," the letter stated.

An ICE spokesman said the agency conducted a review of FPS and the agency cannot fully cover its costs under the existing financial structure.

"We look forward to continued cooperation with the Appropriations Committee as we work through this issue," said Nick Smith, the spokesman. "It is important to note that the proposed reprogramming would have no impact on the funding or operational activities of ICE Detention and Removal Operations."

DHS declined to comment on the matter. Gregg's office did not respond to requests for comment, and the ranking member's office did not return calls either.