OMB: Agencies should plan for budget cuts in 2017

Federal agencies should plan on cutting their budgets 5 percent in 2017, according to new budget guidance from the Office of Management and Budget.

OMB said civilian and defense agencies should prepare 2017 budget proposals that cut 5 percent of their discretionary budgets from the fiscal 2017 levels laid out in President Obama's 2016 budget proposal, while making room for administration priorities.

"In working toward this funding target, all agencies should include sufficient funding for ongoing Presidential priorities and continue efforts to increase effectiveness and reduce fragmentation, overlap, and duplication. Your submission should include a separate section that identifies recommendations to this effect, both within your agency and across programs administered jointly with other agencies," OMB Director Shaun Donovan wrote in the guidance.

Agencies will have need to pursue the budget cuts while also making room for investing in the following priorities:

  • Leveraging data-driven management reviews
  • Supporting agency digital service teams
  • Freezing or reducing the federal real property footprint
  • Enhancing or moving to shared services.

But Donovan also warned that the automatic budget caps known as sequestration will wreak havoc on agency budgets and curtail investment in infrastructure, education and innovation.

"In the absence of congressional action, both defense and non-defense discretionary funding in FY 2016 will be at the lowest levels in a decade, adjusted for inflation, even though the need for pro-growth investments in infrastructure, education, and innovation has only increased," Donovan wrote.

He said the administration will continue to push for an end to sequestration and for a budget that would cut costs in "commonsense" ways and close tax loopholes to fund needed priorities.

"The Administration looks forward to working with the Congress to replace senseless austerity with smart investments that strengthen America, as members of Congress from both parties have urged," Donovan wrote.

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