OMB Director Mick Mulvaney said Friday that agencies will use “carry-forward funding” and greater “transfer authority" in this shutdown.

OMB Director Mick Mulvaney said Friday that agencies will use “carry-forward funding” and greater “transfer authority" in this shutdown. Alex Brandon / AP

Trump Team Enters New, Risky Territory on Shutdown Budgeting

Administration may be skirting the limits of its legal authority to carry forward and transfer funding.

White House Budget Director Mick Mulvaney on Friday deployed some fiscal terms of art when he said the Obama administration had “weaponized” the 2013 government shutdown by allegedly failing to take advantage of agency flexibilities to lessen the negative impact.

Agencies under the Trump administration will use “carry-forward funding” and greater “transfer authority,” Mulvaney told reporters some 13 hours before the appropriations lapse deadline that lawmakers proceeded to miss.

He has ventured, however, into new shutdown budgetary turf.

Friday afternoon, the Environmental Protection Agency administrator put out an unusual statement saying his agency “has sufficient resources to remain open for a limited amount of time during this shutdown. All employees should follow their normal work schedule for the week of January 22, 2018.”

Similarly, the Federal Communications Commission—in contrast to its position taken during the 2013 shutdown--issued a Friday statement saying “because of available funding, the Federal Communications Commission plans to remain open and pay staff at least through the close of business on Friday, Jan. 26.”

Then the National Park Service, after scrambling for much of Friday, released an updated contingency plan that, while acknowledging normal mandatory procedures for an “orderly shutdown,” gives local parks managers unusual responsibility for details of what services remain open.

With agency employees bracing for a confusing day on Monday, sources interviewed by Government Executive suggested some equal confusion about how much budgetary flexibility during a shutdown the law allows.

On paper, the approach laid out on Friday by Trump’s Office of Management and Budget appears similar to that taken by OMB in the past, citing limitations on spending after an appropriations lapse under the Anti-Deficiency Act. “The new OMB memo and FAQ are virtually identical to the 2013 memo and FAQ,” said Shannon Buckingham, vice president for communications and external affairs at the liberal-leaning Center for Budget and Policy Priorities. “If Director Mulvaney believes that the Obama administration’s guidance was incorrect, that is not reflected in meaningful changes to implementation guidance OMB is providing.”

Both memos, for example, have language similar to the final line of Mulvaney’s memo, which states that: "Amounts provided under a [continuing resolution] and apportioned by OMB do not carry over during a lapse unless those amounts have a clear period of availability extending beyond the last day of the CR (e.g., a full 1-year appropriation)."

David Haun, a Grant Thornton LLP public sector director who spent three decades at OMB, said that “the [Trump] memo is basically the same guidance put out every year over the past few shutdowns. It has evolved over the years with adjustments and changes with DoJ and agencies have been through determining what is essential, but it doesn’t break any new ground.”

The OMB guidance does discuss how some activities “that would not qualify for continuation during a very brief funding lapse” might qualify if the funding lapse goes on longer.” The flexibilities will differ by agency.

The EPA’s new approach under Scott Pruitt, for example, will use carry-over funds to stay open next week, but “there will be restrictions on some things such as travel,” according to Krysti Corbett, director of labor relations at the EPA Office of Administration and Resources Management, speaking to union leaders. “This is a very different approach from shutdowns in the past. For example, annual and sick leave is not being cancelled.”

Knowing that the locked gates of national parks in the past have been a powerful symbol of harm from a shutdown, the Trump White House last week suggested that it would strive to give parks special authority. The guidance out Friday night began traditionally: “Effective immediately upon a lapse in appropriations, the National Park Service will take all necessary steps to suspend all activities and secure national park facilities that operate using appropriations that are now lapsed, except for those that are essential to respond to emergencies.” It designated 3,298 of the service’s 24,681 employees “essential” and not furloughed.

But former National Park Service Director Jon Jarvis told Government Executive that the new plan “is quite different and will create a great deal of confusion in the field and for the public. For instance, each park superintendent must make detailed decisions about what is open and what is closed within each park,” he said by email from his new post at the University of California at Berkeley. “Per this approach, some concessions will be open while other may close,” he said. “Some roads, campgrounds, parking lots and viewpoints, may be open while others are closed. Some roads may be plowed open now and will close in the next snow. So how does the visiting public find out what is open and closed? The staff that would talk to the public about the closures or post it on the Web are all furloughed.”

Jarvis said this new guidance would need a formal policy waiver from NPS management policies. “At its core, this is a failure to adhere to the fundamental responsibility to protect park resources, unimpaired, for the enjoyment of future generations,” he said.

The extent of agency freedom to “carry forward” or “transfer" funds is complex and varies by agency, noted Grant Thornton’s Haun, who at OMB tracked spending by the Transportation, Homeland Security and Justice departments, and the General Services Administration. “There’s no one-size fits all.”

The transferring is done “for limited purposes,” he said. Each appropriations subcommittee has unique ways in which the accounts are structured, he added, and some agencies (such as the FCC) have fee revenue from outside sources. “The agencies with funds available can continue to spend it, but it’s very important that they only spend it for the purposes provided.” The amounts permitted for transferring are also small: 5 percent or 10 percent for moving out or into another account.

If Mulvaney is suggesting that agencies transfer money between accounts, “I’ve never heard of it before during a shutdown,” Haun said. “Agencies do have authority to request a reprograming of money, but they have to notify congressional committees and give them so many days to approve it,” he said. “If you’re using a construction account, you can’t just make it available for a salaries and expenses account.” Reprogramming “doesn’t really do anything to help with a shutdown,” he added.

Pruitt’s move at EPA left Haun “flabberghasted. I don’t know what money is available, since most salaries and expenses accounts are annual money and would have expired.”

One notable thing about the Anti-Deficiency Act, Haun added, is that individuals can be fired or fined for willfully violating it. Violations have to be reported to the president and Congress, which refers to the Government Accountability Office. “Financial managers know they can’t screw up because they can be personally held accountable,” Haun said.

The notion that agency leeway for moving funds is limited was echoed by William Hoagland, the longtime Republican staffer on the Senate Budget Committee now with Bipartisan Policy Center. “I believe that if they are to use transfer authority at this late stage, they would have had to use it at midnight Friday night,” he told Government Executive on Saturday. “Otherwise, I don’t think he has the authority to transfer funds post-shutdown.”

On the broader question of carrying funds over, Hoagland added, “To the extent the agencies have unobligated funds, if he was managing the appropriations process correctly, most agencies would not have any unobligated balance sheets in the salaries and expenses accounts to utilize in this period.”

Hoagland added that he didn’t think it was “fair” of Mulvaney to say the Obama administration hadn’t made use of the carry-forward and transfer tools, recalling then-OMB Director Sylvia Mathews Burwell encouraging agencies to use unobligated balances.

The Trump approach, he suggested, risks skirting the law and inviting GAO audits, and “may have minimal impact on the shutdown.”

Click here to see the agencies that plan to remain open in the initial days of a shutdown

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