Coast Guard Dodges Budget Ax But Still Sliced by Inflation The Coast Guard recently avoided a potentially massive budget cut but still struggles to cope with inflation, and the problem is only getting worse, officials said. Were not keeping up with the rate of inflation, Vice Adm. Charles Ray, deputy commandant for operations, said this week during a panel discussion at the Navy Leagues Sea-Air-Space conference in National Harbor, Maryland, outside Washington, D.C. Thats the biggest challenge weve got.. Some of the services budget accounts, such as operations and maintenance, have barely increased, about 0.1 percent, since 2010, the vice admiral said. The rate is far below increases allowed under the 2011 Budget Control Act, which set spending caps on defense and non-defense funding. People complain about the Budget Control Act holding them to 4 to 5 percent, Ray said. Wed love to have 4 to 5 percent.. His comments came in response to a question from the audience about whether the Coast Guard wants to receive a greater share of its annual funding from the Defense Department. The service currently receives about 4 percent of its budget from the Pentagon and doesnt have a target in mind above that figure, Ray told the questioner. The Coast Guard requested $10.5 billion in funding for fiscal 2017, which began Oct. 1, down $800,000, or 7 percent, from the previous year, according to budget documents. The White House Office of Management and budget had proposed a $1.3 billion cut to the Coast Guard in fiscal 2018. The reduction, if approved by Congress, may have forced the service to cancel a contract for a new national security cutter. The decision was reversed after an outcry from naval and maritime advocates. Karl Schultz, commander of the Coast Guards Atlantic Area, said the service has lost about 10 percent of its purchasing power in the last several years and faces a $1.6 billion infrastructure backlog. That problem doesnt go away, he said. Rep. Duncan Hunter, a Republican from California, has proposed moving the Coast Guard from the Homeland Security Department to the Defense Department to better shield the service from funding reductions. But Coast Guard Commandant Adm. Paul Zukunft and other leaders recently said they dont see the need for such a reorganization.