Senator takes aim at agency 'skimming' of earmarks

As President Bush considers options for canceling lawmakers' parochial projects, at least one lawmaker is trying to shine a spotlight on a time-honored but little-noticed practice -- agencies taking a percentage off the top of earmarked accounts for administrative expenses.

Sen. Ben Nelson, D-Neb., the newest Democratic member of the Senate Appropriations Committee, calls the practice "skimming" and a secretive process that Congress has not explicitly authorized.

He inserted language in the fiscal 2008 omnibus spending bill directing OMB to complete a report no later than March 1, 2009, on the practice's extent.

"It's outrageous to me that taxpayer dollars are being used for undisclosed purposes without congressional oversight. It's time to shine a light on the skimming process and uncover what the agencies are spending these secret slush funds on," he said.

Veteran appropriators shrug off the practice, which varies by agency -- some typically do not take out a percentage from earmarked accounts, while others can take up to 20 percent -- as the cost of doing business.

If agencies are required to implement projects they did not budget for and if there is not enough money in regular administrative accounts, the money has to come from somewhere, they argue.

Administration officials say some of the funding is directed toward complying with federal regulations, such as the Small Business Innovative Research Program.

Standard or not, Nelson is arguing it should be subject to the same scrutiny that other federal spending is.

"There are questions to be raised about the authority of the agencies to do this and what they do with the money," an aide said.

In a dig at the White House's possible move to ignore congressional earmarks, the aide added: "It's ironic that the president would be looking to eliminate earmarks that apparently partially fund his agencies."

Nelson has been investigating the matter since 2005, when he discovered that some of his home-state projects were not being fully funded at appropriated levels.

He commissioned a report from the nonpartisan Congressional Research Service, which interviewed budget officers from all 15 Cabinet departments.

Most of the agencies responded in varying degrees of detail, with HUD and the Education Departments replying that they do not take any funds off the top for administrative expenses.

Some examples CRS found include USDA's Agricultural Research Service, which charges a 10 percent fee to finance management costs, and the Animal and Plant Health Inspection Service, which assesses a number of deductions to each earmark costing between 13 percent and 19.5 percent of its original appropriation.

At a hearing last year, Nelson grilled USDA officials on the matter. "There is a certain cost in just administering the earmark that has been established," said then-Agriculture Secretary Mike Johanns.