Challenges often bring out the best or worst in people. Public policy challenges do the same thing to lawmakers. The current moratorium on earmarks presents one of those challenges when it comes to budgeting for the U.S. Army Corps of Engineers. One chamber is trying to meet it responsibly, the other is abdicating their responsibility. Let’s hope the white hats win out.

Historically, the Corps’ budget has been built project-by-project. In some ways this is budgetarily elegant. Salaries and overhead costs are baked into individual project funding, so in theory there are fewer hidden costs.  But, there are thousands of projects funded every year and that also opens up opportunities for earmarks and mischief. In fiscal year 2010 (the last year for earmarks) the Corps civil works budget included 1,738 different projects worth roughly $4.6 billion. That represented a slight increase from the President’s budget request of $4.5 billion, but a major growth in earmarks. Congress stuffed in 629 earmarked projects worth more than $500 million, by cutting and shaving budgeted projects, while increasing the total tab by $100 million. The problem with this is that they diluted priorities and spread the money further and thinner which increases project cost and delays completion.

Fast forward to the earmark moratorium. Congress can't add 629 earmarks. So in the FY12 spending bills they created 26 different “slush-y” funds worth $500 million (that amount sound familiar?) in various areas of the Corps’ budget. The Corps would decide what projects to fund, but some of these funds were micro-targeted to ensure certain types of projects would fare well. Congress provided some squishy criteria, but it was little more than pabulum. When all was said and done, 168 new projects received funding. We think for many of the projects, the fix was in. We know that some lawmakers were lobbying the Corps for their pet projects (we have a freedom of information act request in to find out just how many). In fact, the Corps released their weak document describing how they selected projects days after they released the list of projects. Nothing like working the equation backwards.

This year, the House took a different approach. In fact, they chewed out the Corps (hear! hear!) for their “completely unacceptable” documentation of the process, demanding “considerable improvement in the quality and detail of information… regarding the allocation of …funds.” Fool me once… So this year, the House directs the Corps to develop a ratings system with full explanations that would evaluate all projects that have received funding during the last three years.  The Corps has discretion over what to fund, but if they select a “loser” over a “winner,” it will be obvious. They also whittled down the number of the general funding categories to five worth $324 million.

The Senate must have liked the failed process from last year, because nothing much changed. The direction to the Corps was drafted without improvements, and the number of slush-y funds increased to 28, while the funding dropped some, to $406 million. They even direct the Corps to start on three new construction projects – not specific ones (at least that they are telling us), but three somewhere.

It’s fairly clear that the Senate has contempt for the earmark moratorium and would very much like to go back to the way things were, where political muscle trumped project merit. The House on the other hand is trying to prescribe a better way forward and while we don’t think it’s perfect, it’s something to build off of. The House will be voting on their approach in the next week and the Senate later in the year. Taxpayers will be better off, and better assured that their tax dollars are going to critical projects and not boondoggles if the House wins out.