Kicking The Budget Can Down The Road

[ProdigalJim]

Well, as you all know, my non-CAP day job involves me working in DC and keeping tabs on defense spending. Although this looked likely all along, as of this week, it's even more likely that the U.S. government is going to have to live with a Continuing Resolution -- a "CR" in the jargon -- for six months instead of getting a real budget measure passed in time for the end of the fiscal year on the last day in September.

House and Senate leadership yesterday confirmed that they're talking, cordially, to one another about funding federal activities via a CR into next year, eliminating the threat of a government shut-down until after the elections and until the next Congress sits. The total topline number would be a shade over $1 trillion; that's the legally permissable discretionary spending level in the Budget Control Act of 2011. That's the one that has the automatic cuts baked in.

I'd love to see the government-relations types chime in here on CAPTalk with something more specific, but from where I sit I think that for us, it doesn't necessarily mean "no" funded flying. BUT it does mean that you can't start any new spending. So, no new airplane deliveries unless those airplanes were already contracted in a previous procurement year, no new programs get launched, and so forth. Where it gets tricky is that Ma Blue, faced with those restrictions, might well lower or freeze spending in other areas to preserve it or extend it in others...which is a perfectly reasonable thing for them to do, in the circumstance. A CR could well crimp our activities during the six months it lasts.

And, historically, one CR tends to beget another because politics -- especially as practiced in present-day Washington -- makes compromise and negotiation harder than ever, and thus makes punting the decision even more attractive than usual. Last year there were five CRs put up instead of regular appropriations bills for individual departments; the year before, it was eight CRs. The fiscal 2010 and 2009 periods were pretty decent, with only 2 CRs apiece. Fiscal '08 and fiscal '07 were four apiece.

I hope we don't see too much fallout in the flying schedule and the cadet program. That would be a major bummer for me! 

[Eclipse]

The rumors of "no money" last year, which ultimately resulted in nearly zero impact on operations, killed a lot of wings
in terms of flying hours because the rumor persisted early into cal 2012.

Whatever happens, we need to make sure that nothing but facts are presented to the membership and if we creep
into FY2013 by a week or two with no CR, not panic and star shutting things down.

Most wings have a few bucks in the bank, don't do much in Oct anyway, or can find other creative ways to fund things.

[AirDX]

I'm not so much worried about a CR as I am about the Budget Control Act $500 billion sequester on January 3.  10% across the board for DoD is gonna hurt everyone.  There's a reason they're calling it the "fiscal cliff".

[ProdigalJim]

I'm not so much worried about a CR as I am about the Budget Control Act $500 billion sequester on January 3.  10% across the board for DoD is gonna hurt everyone.  There's a reason they're calling it the "fiscal cliff".

I know. The fiscal news is lousy no matter which direction you look.

Near as we can tell, the CR that's taking shape now sets overall federal spending at $1.047 trillion...that's the number in the Budget Control Act from last year, and the number defining the discretionary spending cap in that law. That's just a hair more money than the CR proposal, apparently now off the table, put up by the Republican Study Committee of 150-plus House members. That group wanted the discretionary funding level set below $1 trillion.

[RADIOMAN015]

Most wings have a few bucks in the bank, don't do much in Oct anyway, or can find other creative ways to fund things.

At our last Wing Conference, the National HQ spokesperson stated that every October CAP's insurance bill comes in and is just over $1 million that has to be paid.   IF the Air Force (AETC/AU) has to be conservative with funding releases to CAP, than the training mission operations funding just isn't available to allocate since the insurance bill has to be paid.

Frankly in my geographic area, October is a great month for training. It isn't too hot or too cold.  Hopefully we won't have that issue this year.
RM

     

[denverpilot]

The FAA operated on CRs for almost a decade. No politician would start a real funding bill until the clamor for one got high enough.

[Eclipse]

At our last Wing Conference, the National HQ spokesperson stated that every October CAP's insurance bill comes in and is just over $1 million that has to be paid.   If the Air Force (AETC/AU) has to be conservative with funding releases to CAP, than the training mission operations funding just isn't available to allocate since the insurance bill has to be paid.

Please explain how this works, exactly?  What with AFRCC and AETC having no connection whatsoever?

[lordmonar]

At our last Wing Conference, the National HQ spokesperson stated that every October CAP's insurance bill comes in and is just over $1 million that has to be paid.   If the Air Force (AETC/AU) has to be conservative with funding releases to CAP, than the training mission operations funding just isn't available to allocate since the insurance bill has to be paid.

Please explain how this works, exactly?  What with AFRCC and AETC having no connection whatsoever?

Except that they both work the same guys in the Pentagon.

Just saying.

To RM.....the insurance bill does not come from appropriated funds  (AFAIK).....USAF funding short falls should not affect us being able to pay that bill.
It will hurt us in training funds though.

[Eclipse]

To RM.....the insurance bill does not come from appropriated funds  (AFAIK).....USAF funding short falls should not affect us being able to pay that bill.
It will hurt us in training funds though.

That was my point - the two are not connected.

[RADIOMAN015]

At our last Wing Conference, the National HQ spokesperson stated that every October CAP's insurance bill comes in and is just over $1 million that has to be paid.   If the Air Force (AETC/AU) has to be conservative with funding releases to CAP, than the training mission operations funding just isn't available to allocate since the insurance bill has to be paid.

Please explain how this works, exactly?  What with AFRCC and AETC having no connection whatsoever?

Except that they both work the same guys in the Pentagon.

Just saying.

To RM.....the insurance bill does not come from appropriated funds  (AFAIK).....USAF funding short falls should not affect us being able to pay that bill.
It will hurt us in training funds though.

Well I really don't know, other than Mr. John Desmarais specifically mentioned at the CAP National HQ Briefing to all of us present about the funding issue (they have been faced with in October), that involved the significant insurance premiums due and release of funds to CAP by AETC.  This affected AF funded TRAINING missions in October.   The sentences were tied into one another so would indicate a relationship to premium payments & AF release of funds to CAP.

I remember reading somewhere in the past that CAP had to borrow money from the bank (short term borrowing) to pay some of its' bills because the USAF was slow in reimbursement (likely under a older retrospective reimbursement versus a current prospective reimbursement /budgeting system), but I thought that had been corrected.  I don't think CAP can borrow appropriated funds to pay for CAP Inc expenses as a due to or accounts payable to the government.  HOWEVER, it is possible that CAP inc could utilize its' own funds (BTW CAP Inc funds do include squadrons/groups funds in the wing bankers program) to pay authorized expenses pending reimbursement from the USAF, so could set up a receivable due from the government.   Realistically, one cannot over commit what is in the funding document for the month or quarter even in the Air Force.  With CAP of course it is "real" money in bank accounts.   

Of course with our current audited "consolidated" financial statements it's impossible to really tell what is paid by CAP Inc self generated funds & what is paid by AF (taxpayer) provided funds. Perhaps it's both for insurance.  There's no way to look at any expense category on that financial statement and easily determine the funding source.   (and that's the downfall in this consolidation, that would either have to provide extension foot notes or could just as easy provide a supplemental schedule that showed what CAP's internally generally revenue was paying in specific expense categories and functional areas -- that would add significantly IMHO to transparency to the membership as well as potential donors).

RM     

   

[Eclipse]

Well I really don't know, other than Mr. John Desmarais specifically mentioned at the CAP National HQ Briefing to all of us present about the funding issue (they have been faced with in October), that involved the significant insurance premiums due and release of funds to CAP by AETC.  This affected AF funded TRAINING missions in October.   

Yes, we know this.

It happens every year and has happened every year since I joined and Congress has played chicken with the budget and appropriations.

October is historically a "down" month, as it is for many companies on a fiscal calendar.  Everyone is getting their budget act together, requesting
funds, waiting for deposits, whatever, not to mention the practical reality of recovering from Summer activities, a slowdown in participation when school starts, etc.  For 12 years we've done the same dance - fly the rest of the O-Ride money in September, because it'll
take a bit to get more funds in October.  Also fire is hot, and gravity is a downer.

If AETC doesn't release money to CAP, then we won't have any, but it's been historically an issue in October.  The sky isn't even loose, let alone falling,
and the only people who make that insinuation are the ones trying to stir up "issues", and when they do, it ripples for weeks and months.

The vast majority of CAP activities run self-funded, and are not impacted by delays in appropriations (unless the government as a whole is shut down).
If you're not flying, and not doing ES (or aren't that month), you wouldn't even notice the slow down.  Last year we had an issue where they were discussing a full-scale shut down of operations, including local activities that were 100% unaffected by national budgets. 

We don't need to be even looking in that direction, let alone walking that road.

[Eclipse]

Of course with our current audited "consolidated" financial statements it's impossible to really tell what is paid by CAP Inc self generated funds & what is paid by AF (taxpayer) provided funds.

You're on that again, huh?

Irrelevant to the conversation, since the sum total of personal expenditure is based solely on the whim and initiative of the respective members.
Since nothing beyond the dues are required, what a given member spends in a year wouldn't mean anything unless everyone was required to spend that same amount, and/or the corporation would suffer as a whole without that spending, which would not be true.

Joe member spending $500 on uniforms or radios means nothing to Jane member who doesn't need or want them, and if a respective activity commander decides to drop $600 for pizza, that's his choice, but means nothing in regards to ops cost or the organization as a whole.

[RADIOMAN015]

Gee the way DOD and Air Force officials are talking it's going to be a VERY rough budget fiscal year, since continuing resolution basically just funds at the same level as the last fiscal year for the same time period.  Due to the looming automatic cuts, DOD/AF may decide to reduce the level of funding for the first and second quarters to ensure they are closer to the projected cuts.

One website that generally is critical of CAP has mentioned that 100 CAP aircraft will be taken out of service (which I would assume is due to the budget/funding situation).  Of course this is an unsubstantiated statement at this time.

Surely any of us that may be personally impacted financially by any of the proposed cuts are very concerned
RM   

   

[Eclipse]

Surely any of us that may be personally impacted financially by any of the proposed cuts are very concerned   

Obviously.  Relevance to the CAP budget?

[RADIOMAN015]

Surely any of us that may be personally impacted financially by any of the proposed cuts are very concerned   

Obviously.  Relevance to the CAP budget?

See:  http://www.airforcetimes.com/news/2012/07/military-sequestration-could-mean-another100K-troops-cut-072612/

Likely CAP will also be impacted.
RM   

[ProdigalJim]

Following up on my original post, Sen. Reid and Rep. Boehner announced their deal yesterday, and it's in all the papers today.

So we know a bit more....most importantly, Hill staffers are interpreting the sequestration language as applying to whatever the extant appropriations vehicle is when sequestration takes effect, which in this case, means the CR and not the regular appropriation at least until March. As a result, they say, if you write the CR a certain way, you might be able to exempt certain categories or programs from the sequestration axe.

The CR measure isn't written yet, so the horse-trading will continue.

By the by, while we all wring our hands about how bad the automatic defense cuts will be, because operations and maintenance accounts aren't excluded from the across-the-board cuts, there may be a really tough thing coming down for people like air-traffic controllers, TSA screeners and the like. Apart from NextGen, FAA has few procurement programs to cut, so the sequestration cuts could fall disproportionately on operations and day to day FAA activities.

[AirDX]

Following up on my original post, Sen. Reid and Rep. Boehner announced their deal yesterday, and it's in all the papers today.

So we know a bit more....most importantly, Hill staffers are interpreting the sequestration language as applying to whatever the extant appropriations vehicle is when sequestration takes effect, which in this case, means the CR and not the regular appropriation at least until March. As a result, they say, if you write the CR a certain way, you might be able to exempt certain categories or programs from the sequestration axe.

The CR measure isn't written yet, so the horse-trading will continue.

By the by, while we all wring our hands about how bad the automatic defense cuts will be, because operations and maintenance accounts aren't excluded from the across-the-board cuts, there may be a really tough thing coming down for people like air-traffic controllers, TSA screeners and the like. Apart from NextGen, FAA has few procurement programs to cut, so the sequestration cuts could fall disproportionately on operations and day to day FAA activities.

TSA screeners don't work for FAA.

I spent 25 years in the ATC operations end of the FAA, and day-to-day ATC operations won't get touched, unless Obama wants to use it for a political football.  I went through all kinds of budget gyrations in my time, and keeping the facilities open and running takes first priority.  Obama won't mess with that because too much in our limping economy depends on the airlines.  Try to tell the airlines the FAA is reducing services (read how many airplanes they can move) due to a budget cut, and the CEOs will be on the phone to SecTrans and Obama himself (or his replacement after the third week of January).  What the FAA will do is tell a whole bunch of personnel overhead in the shape of a bunch of region and HQ people to stay home, if they have to.

Read the 2011 version here:
http://transportationnation.org/2011/07/26/faa-shutdown-workers-turned-away-air-traffic-workers-frustrated/]
[url]http://transportationnation.org/2011/07/26/faa-shutdown-workers-turned-away-air-traffic-workers-frustrated/ [/url]

[bflynn]

Under a CR, you usually just keep spending the same money that you've always spent.

Doesn't that mean the AF has the same funds available to allocate to us as we had this year?  And that the funds we get directly, we still get?

[ProdigalJim]

Following up on my original post, Sen. Reid and Rep. Boehner announced their deal yesterday, and it's in all the papers today.

So we know a bit more....most importantly, Hill staffers are interpreting the sequestration language as applying to whatever the extant appropriations vehicle is when sequestration takes effect, which in this case, means the CR and not the regular appropriation at least until March. As a result, they say, if you write the CR a certain way, you might be able to exempt certain categories or programs from the sequestration axe.

The CR measure isn't written yet, so the horse-trading will continue.

By the by, while we all wring our hands about how bad the automatic defense cuts will be, because operations and maintenance accounts aren't excluded from the across-the-board cuts, there may be a really tough thing coming down for people like air-traffic controllers, TSA screeners and the like. Apart from NextGen, FAA has few procurement programs to cut, so the sequestration cuts could fall disproportionately on operations and day to day FAA activities.

TSA screeners don't work for FAA.

I spent 25 years in the ATC operations end of the FAA, and day-to-day ATC operations won't get touched, unless Obama wants to use it for a political football.  I went through all kinds of budget gyrations in my time, and keeping the facilities open and running takes first priority.  Obama won't mess with that because too much in our limping economy depends on the airlines.  Try to tell the airlines the FAA is reducing services (read how many airplanes they can move) due to a budget cut, and the CEOs will be on the phone to SecTrans and Obama himself (or his replacement after the third week of January).  What the FAA will do is tell a whole bunch of personnel overhead in the shape of a bunch of region and HQ people to stay home, if they have to.

Read the 2011 version here:

[url]http://transportationnation.org/2011/07/26/faa-shutdown-workers-turned-away-air-traffic-workers-frustrated/]http://transportationnation.org/2011/07/26/faa-shutdown-workers-turned-away-air-traffic-workers-frustrated/]
[url]http://transportationnation.org/2011/07/26/faa-shutdown-workers-turned-away-air-traffic-workers-frustrated/ [/url]

Yes, I know the TSA screeners don't work for FAA. They work for HS. My point (which I'll acknowledge I made sloppily because I was typing on my iPad while riding the commuter bus home) was that the cuts happen across the entire federal government, if they happen, so that means all the various bits that touch aviation could, conceivably, be affected.

Also, this:

FAA Operations Could Face Sequestration Cuts (AWIN First - Aug 01, 2012)
Jen DiMascio jennifer_dimascio@aviationweek.com
WASHINGTON


The "FAA would face significant cuts in operations" under a budget penalty known as sequestration, Jeffrey Zients, the acting director of the U.S. Office of Management and Budget, told lawmakers during an Aug. 1 House Armed Services Committee hearing on the defense budget.

Congress passed the law that would require the penalty into law one year ago, on the premise that a $1 trillion across-the-government budget cut would be so painful that it would force lawmakers to agree on an even larger deficit reduction package.

But lawmakers have yet to reach such an agreement, and legislators, particularly those representing communities hosting defense businesses, are trying to paint a picture of the envisioned layoffs to compel their colleagues to prevent it.

The Aerospace Industries Association (AIA) also has been on the forefront of efforts to prevent sequestration . One of the trade group's executives, Rich Efford, took away from the hearing that the administration will not have the flexibility to shield the FAA 's operations account.

This could prompt furloughs of more than 1,000 air traffic controllers and cause the FAA to shut down air traffic control towers around the nation. (Emphasis mine)

The conventional wisdom was that the FAA would try to avoid budget cuts to operations, which would severely squeeze other areas of the agency's budget, including research and development of the NextGen air traffic modernization program. But if FAA operations are affected by the budget penalty , "then it would affect the airlines and the general aviation community pretty directly," Efford says.

The trade group 's VP for civil aviation says the FAA will not compromise safety. But efficiency, which would impact all areas of the industry , is another matter.

[ProdigalJim]

Under a CR, you usually just keep spending the same money that you've always spent.

Doesn't that mean the AF has the same funds available to allocate to us as we had this year?  And that the funds we get directly, we still get?

Yes, but the complication arises in understanding how the sequestration cuts might apply in a CR environment. Nobody, including the relevant House and Senate staffs and the folks at the Pentagon, has yet fully analyzed how that will play out -- and won't be able to until the complete CR language is written and enacted.