Agencies to Try Shifting Funds to Soften Gramm-Rudman Cuts

Administration officials, scrambling to soften the impact of spending cuts under the new Gramm-Rudman balanced budget law, are hoping to avoid rigid across-the-board reductions by shifting funds from one program to another.

But the emerging strategy, which came to light Monday as federal agencies gave further details of $11.7-billion worth of pending trims, could ignite a confrontation on Capitol Hill if it is seen as a way of subverting the law’s intent, a key member of Congress warned.

Most defense programs are supposed to be cut by 4.9% and most non-defense programs by 4.3% when the first round of Gramm-Rudman cuts, covering the last seven months of fiscal 1986, take effect March 1.

Funds ‘Reprogrammed’

However, budget officials at eight departments and the Environmental Protection Agency said that they will seek to “reprogram,” or shift, funds to avoid adverse consequences or to preserve certain priorities endangered by the equal cutting of all programs. In most cases, agencies’ reprogramming requests have to be approved by congressional appropriations committees.

“Every individual thing can’t be cut,” said Al Kliman, a spokesman for the Department of Housing and Urban Development. “(The General Services Administration) isn’t going to let us reduce our rental bill. The phone company isn’t going to give us a discount because of Gramm-Rudman.”

At the State Department, Comptroller Roger B. Feldman said that flexibility is needed in cutting funds for security improvements at U.S. embassies. He noted that “4.3% of a building can’t be left off. We have to be able to make some projects whole and drop others.”

Similarly, Howard W. Messner, a top EPA official, said: “We are currently discussing various reprogramming options to minimize the effect on any one program while assuring that adequate resources are being directed toward the nation’s high-priority environmental problems.”

No Objection by OMB

After conceding that “I haven’t the faintest clue as to how much it will be used,” Edwin L. Dale, spokesman for the White House Office of Management and Budget, said that “our instructions to agencies was that we don’t object to reprogramming.”

Rep. Leon E. Panetta (D-Monterey), a key shaper of the Gramm-Rudman law, said that limited shifting of funds would be justified in emergency cases involving, for example, public safety or foreign policy.

But he expressed concern that the tactic will be used as a way to substitute the Administration’s priorities for those of Congress.

“I don’t think anybody contemplated what I think is going to happen, which is probably a massive effort at reprogramming,” Panetta said.

Loophole in Law

In passing Gramm-Rudman last December, Congress wanted the automatic spending cuts under the law to fall equally so that the Administration could not impose its priorities on programs enacted by Congress. However, in a little-noticed follow-up measure, Congress left the Administration a way out, authorizing agencies to continue the practice of reprogramming funds that have already been appropriated.

“The real test will be whether the appropriations committees concur or put a halt to any broad-based reprogramming,” Panetta said.

A Senate Appropriations Committee aide said that “the reprogramming process is available, but it would be wrong to say the process is going to mitigate the effects of Gramm-Rudman. People are going to feel this, and reprogramming can’t save them.”

Rep. Tom Bevill (D-Ala.), chairman of the House Appropriations subcommittee on energy and water development, said that reprogramming “may be a loophole . . . but I don’t really think it will be a big problem.”

Agencies List Cuts

All agencies submitted reports Monday to Congress and OMB showing the precise amounts of cuts faced by thousands of programs on March 1.

Metro Rail, the Los Angeles subway project, will lose $4.3 million from the $101 million appropriation it originally received for fiscal 1986. Gramm-Rudman specifically prohibited the Administration, which opposes the project, from cutting it deeper than other rail projects through reprogramming or other stratagems.