Some federal agencies do rush to spend all of their money at the end of the fiscal year, leading to wasteful expenses, economists told Congress on Wednesday — but they disagreed over how big the problem is.
“It’s in some ways anecdotal, but also now empirical to the point where we were spending hundreds of millions of dollars a year that could be wasteful. The question now is, what is wasteful?” said Jason Fichtner, a senior research fellow at George Mason University’s Mercatus Center.
The year-end spending sprees have been the stuff of government water cooler talk for years, with employees speculating that managers are afraid if they end the year with cash on their books, Congress will decide they didn’t need the money in the first place and cut their budgets in the future.
Sen. Rand Paul, Kentucky Republican and chairman of the federal spending subcommittee of the Homeland Security and Governmental Affairs Committee, called a hearing to try to get to the bottom of how bad it is, and a chief target was the State Department.
Some of diplomatic officials’ year-end bills included $1 million for a granite sculpture at the U.S. Embassy in London, and $5 million for 20 different styles of custom handcrafted stemware to be doled out at embassies worldwide.
The spending adds up: More than 38 percent of the department’s annual budget in 2013 was spent in September, which is the final month of the fiscal year. In 2012 more than 43 percent was spent in September, according to figures on USASpending.gov.
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A former State Department employee, Dean Sinclair, told the committee that a facility manager for a U.S. ambassador once had to order a truckload of plastic flower pots even though they only needed four, just because it was a way to spend the money.
“When they showed up, they took four of them out and put them around the embassy where they were needed, and the rest were put behind a building and left just to rot in the sun,” Mr. Sinclair said. “Because you can’t let them go, you can’t give them away because of the rules, you can’t sell them, you just have to keep them.”
That kind of spending leaves taxpayers fuming, Mr. Fichtner said.
“We can’t go out and say we have effective government, we can’t go out and ask the taxpayers for more funding for programs when they don’t believe we’re spending wisely the money we have today,” he said.
Philip Joyce, senior associate dean of the University of Maryland’s School of Public Policy, said Congress creates an atmosphere of uncertainty in departments and agencies when lawmakers have a tough time passing spending bills on time.
Mr. Joyce said some agencies may be stockpiling money during the year anticipating a year-end crunch, then if Congress gets bills done on time, the agencies rush to spend.
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“I think it is potentially a problem to the extent that funds are wasted. I don’t think, in the overall scheme of things, it is perhaps the highest priority problem we have. But if end of the year spending is real, I want to point to something else that is real as well — the uncertainty created by the appropriations process,” he said.
Mr. Paul, who called the hearing, has proposed a bill that would give federal employees a cut of the money saved if they come forward and identify areas of wasteful spending. Personal incentives are important, he said.
The two economists, however, suggested a rollover budget, where agencies could keep a percentage of their budget without affecting how much Congress gives them for the next budget.
“The idea of just doing something at the staff level for money is one thing, but if you don’t change the incentives for the managers as well, then you still have a problem,” Mr. Fichtner said.
• Anjali Shastry can be reached at ashastry@washingtontimes.com.
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