The Office of Management and Budget (OMB) told agencies to plan on cutting their budgets by 5% in 2017.
According to new guidance from OMB Director Shaun Donovan, agencies should pursue cuts but also have sufficient funding for the following priorities: cross-agency priority goals, data-driven management reviews including FedStat, agency digital service teams, reducing improper payments, freezing or reducing the federal real property footprint, enhancing or moving to shared services, and implementing the Digital Accountability and Transparency Act and the Federal Information Technology Acquisition Reform Act.
"In working toward this funding target, all agencies should include sufficient funding for ongoing Presidential priorities and continue efforts to increase effectiveness and reduce fragmentation, overlap, and duplication," Donovan wrote in the May 1 guidance, adding that mandatory funding increases must be offset elsewhere.
Donovan said the White House’s 2016 budget proposal aims to replace sequestration with strategic cuts. He said the administration will veto budgets that lock in sequestration, which was never intended to take effect. The administration will also reject any congressional proposal that reverses sequestration for defense without reversing sequestration for non-defense.