Why long-term funding is what agencies need, yet what they worry about

Agencies need multiyear funding to get big modernization projects done. Otherwise it is piecemeal, depending on the year-to-year whims of Congress. The Federal Drive with Tom Temin next guest says late appropriations every year cause agencies to resort to the fix-what-we-can-now approach. He’s former management professor and union president Bob Tobias.

Interview Transcript: 

Tom Temin
Otherwise, it’s piecemeal, depending on year to year whims of Congress. My next guest says late appropriations every year causes agencies to resort to the fixed what we can now approach, former management professor and union president Bob Tobias joins me now with his take. And you have an example of an agency with multi year funding that you believe shows what can and should happen.

Bob Tobias
I do, Tom. The Internal Revenue Service, I think is really validating the necessity for multi year funding to develop and maximize new technology. So Congress allocated the IRS $60 billion to be spent over a 10-year-period. It’s unprecedent, just unprecedented. It was part of the Inflation Reduction Act. So the IRS is using this money to link together significant technology, significant organizational change efforts and significant increase in employees as an integrated whole, rather than a patchwork piecemeal approach.

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Tom Temin
So the patch approach seems to be the one that’s sort of more comfortable for agencies, because if that’s what they’re used to.

Bob Tobias
Actually, it’s wise. Because, for example, Congress might fully fund an effort in year one. So the agency goes forward defines its needs and offers a procurement. But before the procurement is completed, the Congress does an arbitrary across the year funding cut, so the agency has to go back to the drawing board, there’s a new procurement, there’s a delay in the costs increase. So I think it’s wise that they do the patch approach, and particularly when you think, Tom, that Congress has not timely done an appropriations process since 1996.

Tom Temin
Yes. And that is just a problem that contractors and agencies alike sort of shrug their shoulders at at this point. But when you think about it, it’s really entrenching a terrible system, because you need 12 months to do things. And you spend two years planning for a particular fiscal year. The budget planning cycle is already on the part of agencies. A 24 month or 30 month process. And so when appropriations are late, it kind of all goes out the window.

Bob Tobias
That’s exactly right. And so, if an agency really wants to change its business processes, it needs to jump through a whole lot of hoops. It needs to define new business process needs, it needs to develop the software to implement the new business process needs. Needs to purchase hardware, and then it needs to test for an extended period of time to make sure that it all is coming together, and at the same time identify the new employee skills needed to implement this new technology. And if any one of those steps are delayed, the integration is thrown off kilter, and it costs more. And I think the IRS is proving that it can, with long term funding, solve that problem. So one really great example, is the way it has used technology and 5,000 additional taxpayer representatives to improve its telephone answering results. So last year 2024, it achieved an 88% answer rate level of service. In contrast, get this, to 18% during the COVID years. So it can work. And that’s an example. And another example, on the planning board’s was to have a direct Free File program. So there are about 87 million low income taxpayers who pay about $13 billion to tax preparers who are now eligible to file for free with something called IRS direct file. So rather than trying to do it all in one year, the IRS started small and 2024 with 140,000 taxpayers, analyze the result made the pilot permanent, and then said we’re going to gradually increase over time to avoid catastrophic failures. As opposed to, I’ve got all this money now I got to spend it, I’m going to turn this switch on and hope Congress funds it in the next year. They have the opportunity and the ability to delay those implementation.

Tom Temin
We’re talking with Bob Tobias, a former professor in the Key Executive Leadership Program at American University. And you were also president of the National Treasury Employees Union, which got its start at the IRS. And so maybe comment on the need for people and talent continuity through all of these vicissitudes that go along with money continuity?

Bob Tobias
Well Tom, the problem with, I think large technology efforts, is to integrate the new technology with trained people, trained qualified people to actually do the work when the technology is ready to be implemented. And so I just gave you an example about IRS direct file, which goes to taxpayer assistance. But the same is true on the compliance side. So IRS is developing some new technology to handle the more complex corporate and partnership returns. And that takes new skills. So on the one hand, they’re developing this technology, and on the other, hiring now, and training now, the employees who will be needed to implement that technology. And the IRS expects that it’ll get somewhere around $50 billion of owed money over the next 10 years, with the combination of technology and employees. And you might quibble it’s 52, or 48, or 40. But whatever it is, it’s going to be a lot of money that’s owed to the US government. And it could not be implemented without long term funding.

Tom Temin
And I think also that gets overlooked, with respect to the IRS, even though people like to hate it because that’s how you have to deal with taxes, is the IRS inherits the tax code, as you say, express it in software that people can understand and instructions that people can understand. But really, the vicissitudes of Congress with respect to the tax code and tax policy. That’s where all this complication originates. And nobody can do anything about that.

Bob Tobias
That’s a fact. So Congress complicates the life of the IRS quite considerably, because it doesn’t get its work done usually until the fall of the year. And so the IRS has to revise all of its tax processing material, and all of its tax processing technology, and get it ready to go by Jan. 1. So Congress not only passes complicated laws, but implements them in a way that is a terrible challenge to the IRS to get it done and get it done right.

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Tom Temin
So what we need then is a single flat tax, one for corporations, one for individuals, and everyone could e-file in 20 seconds.

Bob Tobias
Well, yeah, flat tax would make the technology easy, but all of the research shows it wouldn’t generate enough money. So yes, it could be done on the postcard, but no, it wouldn’t collect enough money.

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