Commentary: Proposed cuts would force government to default on rent

July 28, 2013

Occasionally, we publish blog posts, speech transcripts and other commentaries of interest to the Washington business community. Here is an excerpt from a recent post on the GSA blog :

The House Appropriations Committee is now considering a Fiscal Year 2014 Appropriations bill that would make severe cuts to the budget for the General Services Administration. The House Republican bill would cut nearly $2.5 billion from the president’s 2014 budget request for the GSA — dramatically reducing investments in necessary infrastructure, such as border crossings. It also proposed to fund leases that we get from the private sector at a level that could very likely force the government to default on our rent obligations. We are very concerned about the potential impact this bill would have on local economies, jobs and the real estate business community.

GSA provides facilities to agencies so that they can deliver on their important missions, from laboratories where food safety is ensured to border crossings that protect our country and support our economy. The president’s 2014 budget fully funded this important mission, allowing GSA to spend at the anticipated level of rent collections and ensuring that our federal facilities — built and paid for by taxpayers over successive generations — are preserved and maintained. The president’s 2014 budget also provided for needed investments such as upgrades to the world’s busiest border crossing in San Ysidro, Calif., and fire and safety upgrades in buildings across the country. Every family who owns a home knows that shorting the maintenance budget is only going to spell trouble down the road. In fact, the National Academy of Sciences estimates that every dollar of building maintenance deferred today costs $4 to $5 in the future. Cuts like those proposed aren’t savings.

What is most concerning, though, is that the proposal only provides 85 percent of the necessary funds to pay our rent to the private sector. Like many businesses and private individuals, GSA enters into multi-year lease agreements with private landlords for space. The bill includes a funding level that is 15 percent below what is needed for us to meet our rent obligations. In order to make that work, we may have to default on leases; close facilities; or in some extreme cases, breach our contracts, which would result in lessors charging higher leases for federal agencies. Not paying our rent would create uncertainty in the real estate market across the country, and it would do so at a time when the national economy is still recovering.

We need to get back to the president’s balanced proposal to cut wasteful spending, while investing in critical infrastructure that will create jobs, help the economy and strengthen the middle class. We know that the government’s financial situation is tough and complex. What we need are real, workable, common-sense, business-like solutions to these problems. The House Republican proposal does not meet that test.

Dan Tangherlini heads the General Services Administration.

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