The good news: Unlike last year, agencies won't have to operate through a half-year of budget uncertainty. The bad news: Budgets are lean and getting leaner, with Congress' passage late last month of an omnibus appropriations bill.
So agencies across government are cutting staffs, freezing hiring and travel, and scaling down planned projects:
• The Air Force last week announced a second wave of buyouts — worth as much as $25,000 before taxes — and early retirement opportunities to encourage 4,500 civilian employees to leave voluntarily.
• The Social Security Administration's small boost in its 2012 budget will be outstripped by a $300 million-plus increase in fixed costs. "Another tight year lies ahead," Commissioner Michael Astrue told employees in an email late last month. "We are in the process of making some difficult decisions so that we can accomplish our most important missions."
The agency has been under a partial hiring freeze since mid-2010; agency officials did not reply to questions on whether that will continue.
• Federal construction plans are being especially hard hit. The General Services Administration sought $840 million for new construction but is getting $50 million. That follows a 91 percent funding cut last year, from $894 million in fiscal 2010 to $82 million in fiscal 2011.
The Department of Homeland Security's headquarters consolidation project in Washington will be delayed at least five years because Congress approved only $56 million of the $377 million requested. Only the Coast Guard portion of the project is expected to be finished on schedule.
• The Housing and Urban Development Department saw a 9 percent dip in its budget over last year. Most reductions come out of the HOME and Community Development Block Grant programs, which funnel money to states and local communities for housing rehabilitation and other needs.
"We can't escape that these are serious budget cuts that will have real impact" on state and local governments, HUD spokesman Brian Sullivan said in an email. HUD managers are still assessing the potential effects of the budget cuts on HUD programs, he said.
"I think agencies are still trying to figure out what they are going to be doing" in 2012, said Charles Roy, a former Energy Department budget director now with consultant PricewaterhouseCoopers. But he saw no let-up in the long-term pinch.
"Agencies will continue to cut costs as much as they can and be more efficient with the funding that they have," he said.
Some financial relief may come with the continuation of the two-year freeze on base federal pay and an apparent surge in retirements, added Thad Juszczak, another former budget officer at Grant Thornton. "If you budgeted for them, every day those positions are vacant, you're making money," Juszczak said.
Big budget increase for SBA
One of this year's few winners is the Small Business Administration, which emerged from the budget fray with a 26 percent increase, bolstered by a bump in funding for its disaster loan account.
While the Transportation Department also appeared to benefit from a large plus-up, that apparent boost mainly resulted from a 2011 rescission in contract authority that was not repeated this year, said Erich Zimmermann, senior policy analyst at Taxpayers for Common Sense, a watchdog group.
And in some cases, the impact of reductions won't be as severe as the raw numbers suggest. Funding for the State Department, U.S. Agency for International Development, and other foreign operations is falling 13 percent to about $42.1 billion, congressional figures show.
But those agencies are getting additional funding under a separate $11 billion appropriation for "overseas contingency operations" in Iraq and other countries. Unlike this year, those contingency operations had to be funded last year from a 48.3 billion base budget, spokesman Andrew Laine said in an email.
"We are continuing to review the bill to determine the full impact on all accounts," Laine said.
For most agencies, passage of last month's spending bill marked the first time in more than a year that they have had fixed annual budgets, as opposed to operating on a string of continuing resolutions.
The fiscal 2012 appropriations cycle is also the first to be completed under last August's legislative deal designed to cut more than $2 trillion from future budget deficits by 2021.
Overall, however, the $1 trillion in total discretionary spending represents a minor trim from last year's level.
For many agencies, the final result was far better than they might have foreseen last spring, when House Republicans approved a draconian budget blueprint, said Scott Lilly, a former Democratic staff director for the House Appropriations Committee.
Although agencies like the Environmental Protection Agency were cut, "they didn't get hit nearly in the way you expected," said Lilly, now a senior fellow at the Center for American Progress, a liberal think tank.
The Agriculture Department, which was in line for a 13 percent reduction under the GOP blueprint, will instead absorb a 2 percent cut. At the Labor, Education and Health and Human Services departments — cumulatively targeted for around a 12 percent reduction this spring — the actual impact is also far milder.
The Labor Department received a 1 percent increase in discretionary funding, HHS was cut about 1 percent, and the Education Department was basically level-funded.
Even EPA, a prime target for Republican lawmakers, will see this year's budget fall by only 3 percent, although lawmakers slashed spending on EPA administrator Lisa Jackson's office by one-third, according to the House Appropriations Committee.
In his 2012 budget request released early last year, Obama sought a 13 percent increase for the Education Department, in part to pay for more competitive programs along the lines of the Race to the Top initiative that gives states money to encourage innovation in K-12 classrooms. Instead, Congress cut Race to the Top and gave the department almost exactly the same amount of money as last year.
And while the administration had requested an approximately 10 percent increase for the IRS with a goal of beefing up tax enforcement, the end result was almost a 3 percent cut. In anticipation of the reductions, the IRS offered buyouts, with about 1,000 employees expected to be off the rolls by the end of last month, said Colleen Kelley, president of the National Treasury Employees Union. The agency is considering whether more "targeted buyouts" are needed, Kelley said.
Given the IRS's role as the government's major revenue collector, reducing its effectiveness will reduce the effectiveness of other agencies, Kelley said in a news release, "and that is an outcome the American people do not deserve."
The Defense Department's $518.1 billion base budget is 1 percent higher than last year, according to congressional numbers. But last week, Obama and defense leaders unveiled a leaner war-fighting strategy that would encompass some $450 billion in long-term spending cuts.
2012's biggest budget losers: State and HUD (Federal Times)
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