Federal employees may be glad to flip the calendar over to 2012. While last year was an interesting one for budget watchers, it was often nothing short of nerve-wracking for federal employees.
Amid the partisan wrangling, near shutdowns and crises averted were serious proposals to reduce the federal workforce, rework its benefits and retirement structures, and lock in stagnant pay rates for another year or two.
Federal workers’ groups, unions and other organizations predict, though, that 2012 may not be all that different. In fact, it may be more of the same.
From budget cuts to pay and benefits on the negotiating table, here’s what to look for in 2012.
John Palguta, vice president for policy at the Partnership for Public Service, said many of the issues federal employees will face in 2012 are interrelated. Here are some of the issues he highlighted:
“The federal budget situation and the need to find ways to reduce the budget deficit will continue to be a major issue for federal employees — and not in a good way.”
“Since for much of 2012 the presidential race will be underway, federal employees can expect to be targeted directly and/or indirectly in the campaigns.”
“An increase in federal retirements compared to the last few years will place additional burdens on the federal workforce.”
“Since federal employees cannot do business as usual and also handle the growing workload and flat or shrinking budgets, 2012 will also see an increase in efforts to rethink or re-engineer the way work is done and it may also see an increased interest in civil service reform.”
Coping with 2012 funding levels
In most recent years, the federal government has operated under piecemeal continuing resolutions well into the fiscal year, which starts Oct. 1.
But this year, Congress was able to muster through funding for 2012 more quickly and efficiently in the “minibus,” which contained three appropriations bills, and a larger appropriations package approved in December.
The relief that lawmakers had struck a deal and averted a shutdown overshadowed the fact that some agencies were doled out much less than the administration requested — and even less than what they received last year.
In an interview with Federal News Radio, National Treasury Employees Union President Colleen Kelley singled out the budget for the Internal Revenue Service — which, at $11.8 billion is $305 million below its current level and a substantial $1.5 billion less than what the White House requested.
Fewer resources for the IRS will have a snowball effect because the agency is responsible for bringing in much of the government’s revenue to pay for other federal spending, Kelley said. “The VA, homeland security and fill-in-the-blank,” she said.
“I think the American public will see some impacts,” Kelley added. “I think they’re going to see agencies not able to deliver the level of service that the American public has come to expect and should be able to expect from federal agencies.”
“Many agencies will have to make some tough choices in terms of programs to downsize or even eliminate,” said the longtime observer of the federal government and workforce in email. “There will be continued efforts to find more efficient ways to operate and efforts to find cost-savings wherever possible.”
But Palguta said some agencies have already trimmed most of the fat out of their organizations. Anything further risks a “breakdown” in agencies’ ability to do their jobs, he added.
2013 budget: Formality or futility?
There is still at least another month or so before the White House releases its doorstopper of a budget request for 2013.
Despite the federal government’s best planning, a wrench has already been thrown into 2013 budget planning: sequestration.
Following the Budget Control Act, Congress created a 12-member “supercommittee,” made up of both Democrats and Republicans to come up with as much as $1.5 trillion in deficit reduction. The committee’s failure to reach agreement triggered automatic cuts, known as sequestration, set to take effect next year. The $1.2 trillion in across-the-board cuts — split evenly between the Defense Department and civilian agencies — will take place over 10 years.
The role the federal workforce plays as agencies and lawmakers prepare for sequestration — or try to find ways around it — is still unknown. But Palguta acknowledged the official 2013 budget request would be even more of a “political football” than usual.
Some lawmakers have said they will attempt to come up with alternatives to sequestration, particularly to spare the Defense Department.
Rep. Howard “Buck” McKeon (R-Calif.), the chairman of the House Armed Services Committee, introduced a bill that exempts DoD from the first year of the automatic cuts by reducing the federal workforce by 10 percent over 10 years. The bill would limit hiring to one employee for every three who retire.
But the McKeon proposal is “arbitrary and unrealistic,” she said. “I mean do you really want to have a 10 percent cut at the IRS or at Social Security or at very labor-intensive departments like the FBI, where they’re working to catch terrorists … People have to find a realistic way to go about this.”
Payroll tax fight returns
The fight over the payroll tax cut, which was extended by a divided Congress only at the last minute, is set to make a return appearance this year. A short-term extension of the tax cut expires next month.
Republicans in both chambers flirted with the possibility of freezing federal pay and cutting benefits to pay for the tax cut. However, they eventually dropped those proposals in favor of the Senate’s two-month extension, paid for by higher fees on Fannie Mae and Freddie Mac.
“I think when it comes to Capitol Hill, we’re going to see the same issues come up when they try to put 10 more months on that payroll tax extension,” Tagen said. “I think all of the same issues that were there before — having employees pay more into their retirement, moving from a high-three to a high-five [annuity calculation], potentially extending a federal pay freeze — I think they’re all going to be on the table again.”
Return to normal?
The payroll tax cut crystallized many of the efforts to scale back the federal workforce and make changes to its members’ pay and benefits.
With a Presidential campaign now in full swing, the unions and other federal watchers don’t expect the harsh discourse and legislative proposals to end.
Palguta said federal employees would likely be the target of campaign attacks throughout the year. But that after the election, whatever the outcome, “there will be a renewed focus on making sure … the federal government can provide the benefits and services that the American public expects and demands,” he said.
That would seem to echo many of the developments of 2011. Despite strong rhetoric and sweeping proposals, federal employees began 2012 not any worse off than they did the year before.
In that sense, Kelley said she hopes for a repeat of 2011. “But I do not take that for granted at all,” she added.