February 19, 2004

Pentagon officials predict budget shortfall despite assurances

By Amy Svitak Klamper, CongressDailyPM

Pentagon budget officials say they could run short of funds before the end of fiscal 2004, despite Defense Secretary Rumsfeld's assertion that there is ample funding to pay for operations in Iraq and Afghanistan until the White House requests more money next year.

Only five months into the current fiscal year, the military services privately foresee significant shortfalls in fiscal 2004 funds for Iraq, according to one Pentagon official. The Army could be running behind as much as $3 billion in fiscal 2004, and the Navy as much as $1.6 billion.

According to a Feb. 6 memo from Navy budget chief Dionel Aviles to Pentagon Comptroller Dov Zakheim, the Navy's funding woes are spread over several accounts, including personnel, operational support, transportation and investment costs. The memo, which was read to CongressDaily, was written in response to direction from Rumsfeld's office to scrape together $89 million for military personnel requirements in this fiscal year. That directive called on the Navy to cut funding from specific investment and operations accounts, including the Joint Direct Attack Munition, the Aegis Combat System and Marine Corps operations and maintenance. In the memo, Aviles indicated he would find the $89 million, but dropped broad hints that his fiscal 2004 funds are increasingly lean.

Officially, the Army cannot quantify its fiscal 2004 shortfalls until the end of the fiscal year, but service officials say they need more money to cover the cost of overseas operations.

"The fiscal 2004 supplemental request to the Army's base budget represented our best estimate of expected Global War on Terrorism costs when it was developed in July 2003," one Army official said. "Since that submission date, planning factors have revised and actual costs incurred have replaced estimated amounts."

The Air Force also may be short of cash, the Pentagon official said, and needs $375 million in fiscal 2004 to continue funding several accounts. The bulk of the shortfall comprises $250 million for operations and maintenance costs associated with operations in Iraq. Other funding gaps include money for night vision goggles, vehicles and mechanized material handling systems for airlift. Air Force officials said they were unable to comment by presstime.

The Pentagon is under scrutiny from lawmakers critical of the Bush administration's plan to delay funding for ongoing operations overseas until next year. Many assert that those costs should have been reflected in the president's fiscal 2005 budget request. During testimony before the Senate Armed Services Committee last week, the services' top uniformed officials said funds are sufficient in fiscal 2004, though they predicted difficulty in bridging the gap between Sept. 30 and January of next year, when the White House may seek additional funding for fiscal 2005. Next week, the House Armed Services Committee will hear testimony from Army Chief of Staff Peter Schoomaker and Acting Army Secretary Les Brownlee on the Army's fiscal 2005 budget request.