Federal layoffs possible

November 24, 1993|By John B. O'Donnell | John B. O'Donnell,Washington Bureau

WASHINGTON -- The threat of layoffs for federal workers was revived yesterday after Congress failed to approve a $25,000 early retirement bonus designed to slash the federal payroll.

Legislation to authorize the buyout fell victim to deficit-reduction politics in the closing hours of the congressional session early yesterday, prompting administration and congressional officials to warn that there is not enough money in the 1994 budget to pay all 2.1 million federal workers.

When Congress returns to Washington in January, it could revive the effort to approve a buyout -- an early retirement inducement that 60,000 to 100,000 federal workers would have been expected to take next year. Administration and congressional officials say the legislation would have to be passed early in 1994 if buyouts are to save any money in the current fiscal year, which ends Sept. 30.

Democratic Rep. Steny H. Hoyer of Maryland said that he discussed the situation with White House budget director Leon E. Panetta yesterday and that "we are going to talk about a supplemental" spending bill to finance buyouts early in the new year.

Many of the roughly 250,000 federal civilian workers in Maryland, tempted by the possibility of a $25,000 bonus at retirement, were awaiting action by Congress on the buyout plan.

Although some were clearly dismayed by its defeat, many more were relieved to learn that a plan to raise the federal retirement age from 55 to 65 had been rejected by a slender margin. The proposal, part of a $90 billion spending reduction package proposed by House conservatives, lost on a 219-213 vote.

President Clinton is committed to reducing the federal work force by 252,000 over five years, a goal the administration cannot meet without the inducement of a buyout, Mr. Hoyer said. Mr. Clinton signed an order in February to eliminate 100,000 jobs by the end of 1995, prompting Congress to adopt budgets that reflect the first step in that reduction.

"There are more people on the payroll than we can pay for," said an aide to the House Appropriations Committee.

"One option is layoffs," added Sharon Wells, a spokeswoman for the federal Office of Personnel Management.

"It's possible" that there will be layoffs, said Rep. Constance A. Morella, a Montgomery County Republican who represents thousands of federal workers.

"We hope it won't be probable."

Barry Toiv, spokesman for the Office of Management and Budget, said, "Our view has been all along that without buyouts [reductions in force] might be necessary. They were and remain a last resort, but they can't be ruled out."

Mr. Hoyer said that while he did not expect layoffs, "there are going to have to be incentives for people to retire early" if budget goals are to be met.

The 252,000 reduction in the federal work force would save $32.5 billion over five years, Mr. Hoyer said.

The House failed to approve the legislation after the Congressional Budget Office warned that it would cost the government an extra $519 million in pension outlays over five years. House leaders were unwilling in the closing hours of the session to find a source for that money.

At the same time, a Senate buyout bill was hung up in a dispute over the savings that it would produce. Senate Appropriations Committee Chairman Robert C. Byrd of West Virginia has set his sights on using $22 billion to finance the crime bill passed last week by the Senate. But Republican Sen. William V. Roth of Delaware objected, refusing to agree to drop from the bill a provision to dedicate the funds to deficit reduction. With only a few senators present, it took only an objection from a single senator to block action.

When the second session of the 103rd Congress resumes in January, legislation can be picked up where it was left at adjournment. That means that if they could reach agreement on the details, the House and Senate could quickly approve a buyout package.

Advocates of the buyout had hoped a measure would be approved before Congress quit so that a 90-day "window" for employees to accept the $25,000 offer could have opened in January. The amount that the federal government saves in the current fiscal year depends on the timing of each employee's decision to leave -- with the earliest departures producing the greatest savings.

At some point in the year, congressional aides say, a buyout would produce no savings and, in fact, could be more costly to the government than having the worker stay on the payroll. Thus, say congressional aides, unless buyout legislation is approved early in 1994, the whole matter will probably be put off until fiscal 1995 begins in October.

If that happens, federal agencies will have to scramble to find savings needed to avoid going beyond their 1994 budgets. One area of savings would be layoffs.

"With no inducement for employees to take early outs, they probably are going to have to resort to RIFs [reductions in force], which are more costly," said Witold Skwierczynski, an official of the American Federation of Government Employees.

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