House panel seeks to restrict Army Corps' ability to shift funds

The House Appropriations Committee is moving to severely curtail the Army Corps of Engineers' ability to shift funds among water projects, reflecting a frustration with the Corps for redirecting money and then failing to keep lawmakers informed.

The House's action might set up a conference battle with a Senate panel that has been traditionally more supportive of Corps' flexibility.

The Senate Energy and Water Appropriations Subcommittee is expected to begin work on its draft fiscal 2006 Energy and Water bill shortly after the Memorial Day recess.

A draft $29.75 billion Energy and Water spending bill, to be considered Wednesday by the full House Appropriations Committee, contains a new provision incorporating earmarked water projects and their funding levels into the base text of the bill, rather than simply listing the projects and recommended funding in an accompanying report.

The move would have the effect of writing specific project funding into law, a major departure from past policy that would limit the Corps' ability to shift funds to other projects.

Drafted by Energy and Water Appropriations Subcommittee Chairman David Hobson, R-Ohio, and ranking member Peter Visclosky, D-Ind., the measure is aimed at reining in the agency's "out of control" accounting practices, a committee aide said. "The Corps of Engineers is a lot like that skit on Johnny Carson, where the guy is spinning plates on a table, running around making sure all the plates are spinning so they don't all come crashing down," the aide said.

A Corps spokesman declined to comment because the matter is pending before Congress. Officials representing industry stakeholders also declined comment, since the bill has not yet been made public.

But some are privately sounding the alarm, arguing the moves will limit flexibility to meet unforeseen needs, especially given the year's tight budget. The fiscal 2006 bill would fund the Corps at $4.75 billion -- $414 million above the administration request but trimmed $293 million from the previous year.

The bill would prohibit any increase or reduction of appropriated funds for redirection to other purposes, known as reprogramming, by more than $2 million, or 10 percent of any Corps project or activity -- whichever is less -- to be evaluated based on each project's immediate needs.

There is also a $10 million emergency allotment within operations and maintenance accounts, and a similar $1.7 million set-aside within flood-control funds earmarked for the Mississippi River and its tributaries.

"The Committee believes the Corps' execution of congressionally directed projects through its liberal use of reprogramming actions ... exhibit ongoing disregard of the specific program and project allocations provided by the Congress each year," states the report accompanying the bill, to be unveiled Wednesday.

When the Corps transfers money from one project to another, it is obligated to repay the funds, usually with similar transfers from future appropriations. According to preliminary estimates compiled by the Appropriations Committee, the amount it has borrowed and not yet repaid over the years is in the range of $500 million.

The report notes that the Corps has often used reprogrammings to meet an internal goal of spending 99 percent of appropriated funds for a given fiscal year, regardless of how small the amount transferred is.

According to the committee report, GAO found in one example that the Corps shifted 6 cents from one project to another to meet that goal, and in three instances less than $1 was shifted in and out of a project in the same day, the aide added.

"This strategy, while it seeks to minimize annual carryover, ignores project financial requirements in future years and congressional project allocations for the current year," the report states. Moreover, the transfers are so numerous -- as many as 20,000 in any given year among only 2,000 or so projects -- that the Corps does not even consider the moves worthy of congressional notification.

"There's no trust between the committee and the Corps anymore," said one person familiar with the discussions. "It's pretty harsh."