OMB Ambiguous on Commissary Budget Cuts | Business
The Air Force Times--The White House Office of Management and Budget is sending mixed messages about whether the Defense Commissary Agency’s surcharge fund — created by a 5 percent markup on purchases paid by customers at the cash register — will be subject to automatic budget cuts due to take effect in January.
In one section of a report, OMB says some parts of the $306 million fund, which supports construction, repair, improvements and maintenance of commissaries, could be affected by the automatic, across-the-board cuts known as sequestration, due to happen in January if Congress can’t come up with an alternative deficit-reduction plan.
The report says that $55 million of the total $306 million in the surcharge fund would be exempt from sequestration. Of the remaining $251 million, $25 million could be cut under sequestration. The report does not explain the partial exemption.
Yet in another section of the same report, OMB officials state that the entire surcharge account is exempt from cuts.
Officials at the Defense Commissary Agency and the Defense Department had no comment on the issue, and OMB officials could not be reached to explain the discrepancy in the report.
Advocates contend the surcharge fund should not be raided because it is not taxpayer dollars.
“This is patrons’ money. It belongs to them. They pay a higher price at the cash register. It shouldn’t be subject to reductions designed to reduce the national debt,” said Steve Rossetti, director of government affairs for the American Logistics Association, a group of manufacturers and distributors that sell to commissaries, exchanges and MWR activities.
But while cutting the surcharge fund would be unfair, Rossetti said, “technically, it’s probably correct. I’m not sure the administration had the latitude to exempt the surcharge fund because of the technical nature of how it’s allocated out of the treasury,” he said.
Even if the surcharge fund is exempt, sequestration would still force a 9.4 percent cut, about $130 million, in the commissary agency’s $1.38 billion operating budget. “That would have a huge impact” on commissaries, Rossetti said. Operations and store hours would be affected, and the agency would probably be forced to close some stores, he said.
“We’re not saying DeCA shouldn’t share in reducing the cost of the government. They should, and they already have,” Rossetti, said, noting that the commissary has reduced costs by nearly $1 billion over the last 20 years.
Their allotted appropriation of taxpayer dollars “has remained constant during that time, while a lot of defense programs have gone up,” he said.
“Every year DeCA has had cost-cutting initiatives,” he said. “Further cuts of this magnitude would cut into the bone of actual store operations.