IRS chief says pay parity measures hinder agency activities

Internal Revenue Service Commissioner Mark Everson said Wednesday that his agency's operations have been hurt by congressionally mandated civil service pay adjustments, which are used to keep civilian raises in line with the military.

The pay parity issue has been a hot topic in Washington, and House lawmakers last week supported a "Sense of Congress" resolution backing equal pay raises for civilian and military federal employees in fiscal 2005. The Senate Budget Committee included pay parity in its fiscal 2005 budget resolution. President Bush, however, has called for 3.5 percent raises for the military and 1.5 percent increases for civil servants.

Everson told Senate Appropriations Subcommittee on Transportation, Treasury and General Government members that tax evasion law enforcement has been hampered by insufficient funding. When Subcommittee Chairman Richard Shelby, R-Ala., noted that almost 100 percent of IRS budget requests had been funded in recent years, Everson said pay parity measures had hurt some of the agency's functions, including enforcement.

When Congress raises pay increases above the amount proposed by the president, agencies are faced with "an additional handicap," he said. "If you get …whacked by a further 2 to 3 percent by you folks up here, it becomes a lot harder."

Office of Management and Budget officials and Rep. Ernest Istook, R-Okla., have been making the same case against pay parity, claiming that the additional raise places an unfunded burden on agency budgets.

"We were already very much aware that it hurts every agency," said Micah Swafford, a spokeswoman for Istook. "There have to be priorities made. When you increase the payroll, you have to cut other areas."

Pamela Gardiner, the acting Treasury Inspector General for Tax Administration, said Wednesday that she supports more funding to cover the pay raises, but there were many factors contributing to IRS funding shortfalls. She said pay parity was "definitely not" the primary culprit.

Rep. Tom Davis, R-Va., has supported equal pay adjustments for civil servants, and his office criticized Everson's statement.

"Yes, agencies have to make spending decisions to accommodate annual pay adjustments. But these funds come from their salary and expense accounts, not from their programmatic accounts," said Dave Marin, a spokesman for Davis. "We might be more sympathetic to claims that training gets cut to accommodate pay adjustments, but then again, imagine the massive training costs that would accompany the mass exodus of employees" whose salaries are not competitive.

Responding to Everson's comments on tax law enforcement, Marin said IRS employees who pursue tax evaders must be suitably compensated.

"Imagine how bad enforcement would be with an agency full of half-rate employees," he said.