OMB has sent several recent signals that agency budgets may tighten in fiscal 2011 after several years of loosened purse strings and additional stimulus money. The guidance could pose a management problem for agencies, which in many cases are ramping up hiring and staffing in order to meet new responsibilities, and in many cases are based on underlying assumptions about continued growth in mandates and spending.
In agency guidance for fiscal 2011 budget and performance plans, OMB director Peter Orzag told agencies that unless they have been given explicit permission, they should not request for 2011 more money than they receive for fiscal 2010. Also, unless they have been instructed to the contrary, they should prepare plans for how they would handle either a budget freeze or a 5 percent reduction.
Agency budget submissions also should include "significant terminations, reductions and administrative savings initiatives (five at a minimum) that reduce costs below FY 2010 budget levels."
The memo also said agencies should focus on high-priority performance goals "as opposed to policy and budget development and the administration’s legislative agenda." Agency goals should focus on what is of highest direct value to the public or agency missions "as opposed to being focused on internal agency management or other administrative priorities."
The memo follows a recent announcement from the White House of its intent to restore "pay as you go" procedures that were used during the Clinton administration as a budget-cutting device, in which new spending initiatives generally must be offset by new savings from programs within the same general category.