Thursday, September 30, 2021: Government Fiscal Year Kicks Off In Status Quo
With just hours to spare before the new Fiscal Year 2022 was set to begin on October 1, 2021, President Biden signed late on Thursday night a stop-gap Continuing Resolution (CR) to keep the federal government open and operating through December 3, 2021: about two months. The law, H.R. 5305, “Extending Government Funding and Delivering Emergency Assistance Act,” continues the pre-existing appropriations for covered federal Executive Branch agencies at the same levels as the previous fiscal year (or in some cases with minor modifications).
By the way, kudos to Tony Kaylin, Vice President of the American Society of Employers in Detroit and this year’s Chair of the National Industry Liaison Group, for having predicted, with confidence, IN JANUARY 2021—10 months ago—that Democrats and Republicans would lock up on the budget and that the White House would have to settle for a Continuing Resolution, and not a full year’s budget.
No additional funding means no additional headcount authorization for any federal agency subject to the CR. For example, in our blog on June 1, 2021: OFCCP Seeks Unprecedented 33% Budget Increase: Focus is on Rebuilding OFCCP; Not Audit Enforcement, we wrote about OFCCP’s hope to obtain additional budget in Fiscal Year 2022 (which just began on Friday October 1, 2021) sufficient to hire 188 additional employees. If that budget proposal is successful, it would increase OFCCP’s on-roll headcount authorization from its current (FY 2021 and now FY 2022-through Dec 3, 2021) 451 employee authorization to an authorization to hire up to 639 employees (451+188).
The CR does not mean that the federal agencies cannot hire, it just means that their budgets will remain even with their last year’s budgets which could afford, in the case of OFCCP, 451 employees. In fact, most federal agencies will be hiring though the Fall because they are short-staffed and their on-roll headcount does not equal or exceed the agency’s authorized headcount. OFCCP, for example, is currently down in headcount over 50 employees (with a current headcount figure of slightly below 400 employees nationwide recently whispered to us). So, OFCCP has budget to hire another 50+ employees immediately, if the agency could only find that many qualified applicants willing to go to work for it.
If, if, if the temporary stop gap measure the President signed Thursday night through December 3 were to continue through the entire Fiscal Year 2022 (as has happened several times in recent years), however, that would spell a further shrinkage in the headcounts of the federal agencies. In the case of OFCCP, for example, its costs to do business typically increase about 2% per year (to fund larger and more numerous pensions, increased salary costs, and higher costs of goods and services the agency needs to operate). Two percent on OFCCP’s current $106M budget is a little over $2M in added costs to operate during FY 2022. Two Million dollars is about the cost needed to keep 20 OFCCP employees on-roll. So, if OFCCP’s FY 2022 budget for the entire Fiscal Year stayed the same as last year (FY 2021) and OFCCP’s expenses rose about $2M, OFCCP would likely compensate by simply dropping its headcount authorization from its current 451 to about 430.
The current two-month CR also probably adversely impacts the timing of the roll-out of OFCCP’s AAP-Verification Initiative. Funds necessary for new OFCCP employees to manage that new project and to buy and service the needed computer servers and software necessary to manage that initiative may be needed before launch.
Federal contractors and OFCCP Director Jenny Yang will watch the continuing discussions in the Nation’s Capital with interest as the parties next prepare to position themselves for the “federal budget ceiling” increase fight to be resolved one way or the other by October 18, 2021 (i.e., the date U.S. Treasury Secretary Janet Yellen has calculated the federal government will literally run out of money and will start defaulting on its debt payments).
Resolution of that large financial issue, will then pave the way for the Congress to again lock horns on the Budget Bill in an attempt to resolve it on or before December 3, 2021 when the current CR will expire. On Friday, President Biden threw a concession to moderates in the Democratic Party objecting to the size of the Budget Bill by telling them that he was lowering the Budget Bill proposal (recently renamed the Human Infrastructure Bill to make it sound more saleable) from a hoped-for $3.5 Trillion to about $2 Trillion. He then threw left-wing Democrats (recently renamed “Progressives”) a concession by deciding to move forward first on the Human Infrastructure Bill (packed with Biden’s social spending proposals) while holding back for later debate and passage of the “Infrastructure Bill” to rebuild our roads, bridges and broadband internet systems (now renamed the “Bipartisan Infrastructure Framework”) and now repriced (as of July 28, 2021) from $1.5 Trillion to $550 Billion in a bi-partisan deal in the U.S. Senate.
So, after the Budget Ceiling fight and before December 3 (when the CR times out), Democrats are poised to resume the debate about the size of discretionary spending on the federal government budget (last year FY 2021=$1.298 Trillion), and will bundle it with the Biden social spending hopes, now trimmed to at least (only) about $2 Trillion (leaving about $700 Billion for Democrats and Republicans to arm wrestle between October 18, 2021 and December 3, 2021. The action there is not just as to the number ($1.3ish Trillion verses $2ish Trillion, or something in between), but also as to what social programs and federal agency budgets will shrink from the President’s original $3.5 Trillion budget proposal.
You saw Democrats fighting on Thursday and Friday among themselves as to what to cut out of the $3.5 Trillion original Biden proposal to now fit within a $1.5 Trillion to $2 Trillion budget. That turned ugly, with polite reporters suggesting only that “trust” between Democrat Members of Congress became challenged as one after another pet project social program went on the chopping block. And then when the Democrats quit squabbling among themselves about what’s “in” and what’s “out” of the budget to eventually be newly proposed, the Republicans may want to have a say in some of that spending, too. So, there is a tough road-to-hoe ahead.
And, remember, these discussions could easily deadlock again and force another Continuing Resolution (which, by the way, are terribly disruptive to federal agency managers trying to run the agency and lay down plans in what feels to them like warm wiggly jello).
NOTE: Senator Joe Manchin (D-WV) has repeatedly and firmly said he will not vote for any Budget Bill or Human Infrastructure Bill, by whatever name, for more than $1.5 Trillion. And Senator Krysten Sinema (D-AZ) (who is a “tough cookie” by all accounts) has said she would not vote for any bill if the Bipartisan Infrastructure Bill (she and Senator Manchin helped sponsor and move through the Senate) did not first pass the Congress before the Budget Bill. In fact, Senator Sinema left town last week and headed home to Arizona (took her ball and went home) to register her disgust with discussions which led Speaker of the House Nancy Pelosi (D-CA) to twice delay the vote in the House this past week (and then indefinitely) while backtracking on her earlier promise to moderate Democrats to call for a House vote in September on the heels of the Senate’s July 28, 2021 bi-partisan vote in favor of the Bill. (NOTE: U.S. Senators must be on the Senate Floor to cast their vote for or against a Bill. Senator Sinema’s absence from Washington D.C. would cost Senate Majority Leader Chuck Schumer a “Yes” vote necessary to pass any Senate Bill lacking bi-partisan support).
So, I guess we better ask Tony Kaylin what his crystal ball says about a further CR on December 3. Tony, what are you thinking?