House spending bill calls for deep cuts to IRS budget

Wednesday - 7/16/2014, 5:43pm EDT

The House has approved a massive spending bill that would slash funding for the Internal Revenue Service by more than $1 billion next year.

The agency, which has been under fire for the improper targeting of conservative groups, would see its current $11.3 billion budget decline by 13 percent under the Financial Services and General Government Appropriations bill for fiscal 2015 passed by the House Wednesday.

But that's just one of the the provisions of the bill drawing the ire of the Obama administration, which issued a notice earlier this week threatening to veto the legislation.

House seeks deep cuts to IRS funding

The version of the House spending bill crafted by the Appropriations Committee over the past few weeks called for cutting the IRS budget by $341 million dollars from current levels. That alone, drew the veto threat.

The proposed reduction "would hinder IRS efforts to provide robust service to taxpayers, improve enforcement operations, and implement new statutory responsibilities," according to the White House's statement of administration policy. "Further, these reductions would impact efforts aimed at deficit reduction, as funding for IRS enforcement activities returns many times its cost in the form of increased revenue collections."

But House lawmakers sought even more steeper cuts. Two separate floor amendments approved earlier this week are slated to take another $1.14 billion bite out of the agency's bottom line.

"It is up to Congress to use the power of the purse to rein in the IRS and force them to conduct their analysis in an unbiased manner," said Rep. Bill Huizenga (R-Mich), who sponsored an amendment to strip $788 million specifically from IRS's enforcement activities in response to the targeting scandal.

The total spending cuts included in the House bill would leave the IRS with about $9.8 billion in funding — about $1.5 billion below current levels and on par with fiscal 2007 levels.

Tightened budgets over the years have eroded customer service and employee morale at the agency, according to Colleen Kelley, president of the National Treasury Employees Union, which represents IRS workers.

Over the past four years, the size of the IRS workforce has shrunk by about 10,000 employees, she said.

And the two-year budget deal negotiated by Congress last winter gave the IRS barely any reprieve from the across-the-board sequestration cuts.

"With the funding that they were given under the two-year budget deal, there's just no opportunity to rebuild the workforce at all — and not even to stay even with attrition."

House bill not final say on the matter

However, the House spending bill is far from the final say on the matter. A Senate subcommittee version of the Financial Services appropriations bills would boost agency funding by about $236 million above current levels.

"Now, that really will not allow them to rebuild the workforce ... But at least it would allow them to maintain the funding from last year with just a bit of an increase for inflation," Kelley said.

The IRS isn't the only agency budget the House bill would pare down. The House also wants to trim funding for the General Services Administration — stemming from the Federal Buildings Fund — by about $787 million, compared to the White House request.

That's also about $200 million less than what the agency says it needs to cover rent and building operations for its current inventory of leased properties. In its statement of administration policy, the White House said that shortfall could force the government to default on its rent obligations.

But Chris Roth, managing director in Jones Lang La Salle's Public Institutions Practice, said it's still early in the process budget process.

"A lot of what you're seeing now is part of the political process," Roth said. "The GSA is going to ask for and negotiate for what they need, including programs for space consolidation, for real-property disposal, even new initiatives for building maintenance and operations. So, there's an ask there. And then what we're seeing is the House coming back with pressure on the GSA to be more efficient with those funds. A lot of those things just have to play out."

Other measures included in the House Financial Services and General Government Appropriations Bill:

  • The bill is silent on the issue of a federal pay raise, but that's actually good news for federal employees. In the absence of specific legislative language, President Barack Obama has the authority to order a pay raise for federal workers. In his fiscal 2015 budget proposal, Obama signaled his intention to award federal employees a 1 percent pay raise.

  • As is longstanding practice, the bill included language preventing the U.S. Postal Service from ending Saturday mail delivery as part of its cost-cutting efforts. Earlier drafts of the bill excised the prohibition but a bipartisan amendment reinstated it. The White House said allowing USPS to make delivery- service changes are essential in helping the cast-strapped agency "better adapt to its current business environment."

  • The House is also seeking a $4 million cut to the Office of Management and Budget compared to the administration's request. The bill would also require OMB to prepare and include cost estimates to accompany all new executive orders, which the White House called "burdensome," and it would hold $52 million in annual funding for the agency in abeyance until the following year's budget request is submitted to Congress. The administration was a month late in releasing its budget blueprint this year and two months late the year before — much to the consternation of some lawmakers.

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