	Introduction to Army Corps Fiscal Challenges

The Army Corps of Engineers is responsible for building and maintaining much of the federal water resources infrastructure in the United States. The Corps is faced with more demands for building and maintaining its projects than available federal funding allows. This situation raises a number of basic questions about how the Corps functions, including the efficacy, efficiency, and equity of Corps planning and implementation. The FAQs are organized into four categories: Appropriations; Backlog and Project Delivery; Authorizations and Missions; and Navigation Trust Funds. The Administration's budget request is presented to Congress by account. How Is Funding Allocated Under a Continuing Resolution? The congressional increase in Corps funding and the projects specified by Congress can be seen as Congress adjusting the President's request to reflect its perception of the nation's water resource needs and its perception of shortcomings in the Administration's budget. Consideration of a WRDA 2010 ( H.R. 110-114 ) have yet to receive funding. This is why the total construction backlog estimate is more than $62 billion. Although backlogs are not new to the Corps, some of the current concern is that since 1986 nonfederal project sponsors significantly share in the costs of most Corps projects, and many sponsors are frustrated by the lack of certainty about when their cost-shared projects will be completed and the benefits forthcoming. Some see the backlog as a justification for directing more funds to Corps activities, while others see it as a clarion for reducing the level and types of Corps activities authorized. Others view the backlog as a reason for efforts to reduce the expense and time needed to complete a Corps project. Some also view the Corps backlog as a reason for pursuing private sector involvement in and alternative federal financing (e.g., infrastructure banks) for water resources infrastructure. Authorizations and Missions

The FAQs on the Corps authorization and missions address the processes in place for authorization and deauthorization of Corps activities, perspectives on the Corps mission and role, and past efforts to refocus the agency. How Are Corps Studies and Projects Authorized? With the rate of construction authorization outpacing available appropriations in recent decades, the appropriations process has selected from an increasing pool of authorized activities. Opinions on what the Corps and its federal funding should be focused on vary widely. Therefore, with no changes in the overall size of the E&W bill, the more than $500 million in additional funds for HMTF eligible activities would be offset by decreases for other E&W funded activities; these include the other activities of the Corps of Engineers (e.g., harbor construction, inland waterways, flood damage reduction projects, environmental restoration) and the budgets for the Department of the Interior's Bureau of Reclamation (roughly $1 billion annually) and the Department of Energy (between $25 billion and $30 billion annually). After the first five years, expenditures are generally expected to stabilize. In addition to the provisions listed in Table 8 , other Corps authorization and appropriations processes relevant to Corps fiscal challenges also are underway, but are beyond the scope of this report. 433 , H.R. 922 , H.R. 1078 , H.R.
The Army Corps of Engineers is responsible for much of the federal water resources infrastructure in the United States. The Corps is faced with more demands for building and maintaining its projects than available federal funding allows. This situation is raising basic questions about how the Corps functions, including the efficacy, efficiency, and equity of Corps planning and implementation.
Corps fiscal challenges have multiple underlying causes. The Corps and its infrastructure is expected to help meet the nation's increasing demands on water resources and the services they provide; however, what the agency can accomplish given the level of federal funding provided is declining. At the same time, Corps asset management costs are increasing as facilities age. Nonfederal project sponsors that pay a portion of the cost for most Corps projects can become frustrated as Corps studies and projects are authorized, but remain unfunded or are slowed by lower levels of appropriated funding than anticipated. The Administration and appropriators make choices about what to fund out of an increasing pool of authorized activities. For example, the agency now faces a construction backlog of more than $62 billion, while receiving roughly $2 billion a year in construction funding. As Corps fiscal challenges become more apparent, frequently asked questions about the Corps fall into four broad categories:
appropriations, backlog of project delivery, authorizations and missions, and navigation expenditures and trust funds.
At issue for Congress is deciding how to tackle challenges facing the Corps in the context of a tight fiscal climate and other constraints (e.g., earmark moratoriums). In the past, Congress generally has increased the agency's budget above the Administration's request and expanded the list of projects and types of projects funded. At present, fundamental questions about what the agency does and how it operates are being asked by some observers. The perspectives on how to proceed among Members of Congress, project sponsors, fiscal conservatives, environmental interests, and other stakeholders vary widely. These perspectives often diverge based on views of the appropriate federal role in water resources management and infrastructure and the priorities for the limited federal water resources funding. Some stakeholders see the Corps backlog as a justification to direct more funds to Corps activities. Others see a need to reduce the level and types of Corps activities authorized, while still others want to make gains through efficiency improvements to reduce the expense and time needed to complete a Corps project. Some also are interested in pursuing private sector involvement in and alternative federal financing (e.g., infrastructure banks) for water resources infrastructure in order to reduce the demands on the agency. Some of these perspectives are apparent in proposed legislation in the 112th Congress, including H.R. 104, H.R. 235, H.R. 1861, H.R. 2354, S. 475, and S. 573.
This report addresses many of the basic questions regarding Corps of Engineers activities under a constrained fiscal climate. It also includes limited discussion of larger trends and proposals that may be of interest to Congress as it considers Corps activities going forward.