A Capitol Police inspector general’s report has uncovered potentially criminal misconduct by administrative staff who allegedly lied to investigators about the department’s projected multimillion-dollar budget shortfall, police officials said Thursday.

It also uncovered mass incompetence within the administrative wing of the agency tasked with protecting Members, staffers and Capitol visitors.

“There were a couple of folks that were not truthful, we believe. Not forward, not cooperative,” Inspector General Carl Hoecker said. “We have reason to believe that they withheld information from us.”

The comments, just the latest in the protracted saga of police budget missteps, came at a hearing of the House Administration Subcommittee on Capitol Security. Police Chief Phillip Morse, who testified alongside Hoecker, did not make public which employees were responsible for the alleged misconduct, but he told subcommittee Chairman Mike Capuano (D-Mass.) that the staffers are still employed, pending another IG investigation into the alleged lies.

“It can be a criminal offense,” Morse said. “Before I can make personnel decisions with respect to conduct or performance, I have to be given all the facts.”

In an interview, Morse declined to say whether the alleged wrongdoers were suspended from work, citing the department’s policy not to comment on personnel issues. Hoecker said in an interview that he couldn’t speculate how long the investigation will take.

The hearing was convened to discuss the findings of the IG’s audit of the department’s budget formulation process after it was discovered in February that miscalculations in costs such as holiday pay, loan repayments and attrition rates caused a projected $5.5 million budget shortfall for fiscal 2010.

Hoecker said that shortfall has now been increased to a projected $6.8 million and as much as $14.8 million for fiscal 2011, depending on the department’s cost-cutting measures, such as delays in replacing equipment and training officers.

Still, despite the massive financial troubles, all parties at the hearing agreed that this will not affect the safety of Capitol Hill.

The report, which was not released to the public but was discussed in length at the hearing, painted a damning picture of the Capitol Police’s administrative arm, which is headed by Chief Administrative Officer Gloria Jarmon, who was not present at the hearing.

Among the revelations was that police administrators noticed red flags pointing to a failed budget as early as March 2009, but they did not notify Morse.

“Let’s be blunt,” Capuano said. “The audit does not reflect well at least on the financial management of the Capitol Police.”

A House Democratic aide familiar with the matter said Morse delegated the financial responsibilities of his office to the administrative wing and was basically misled.

“I don’t know where it began, but certainly the person who heads the administrative operations was asleep at the wheel and didn’t provide him with the information he needed,” the source said.

Hoecker told lawmakers that the department doesn’t have adequate control over its budget formulation process, that past proven budget practices were not followed and that the process is outdated.

“As a result, the department is at risk of requesting insufficient funding or overspending its appropriations,” Hoecker said. “OIG concluded that the overarching root cause is that the department’s administrative management has allowed inadequate financial weaknesses to persist, neglected to hold individuals accountable for implementation of Government Accountability Office and OIG recommendations and ineffectively managed its workforce.”

Specifically at issue were findings that administrative staff ignored a series of established budget control procedures — in which staff evaluate cost, risks and purpose of expense requests — despite the fact that a successful budget was produced in fiscal 2009 using the very same procedures.

The report uncovered e-mails between Morse and Jarmon’s office in which Morse asked why the processes were not followed, though the date of the correspondence wasn’t revealed.

“I don’t know why anyone at any level chooses not to follow the processes that have made us so successful,” Morse told lawmakers at the hearing. “This is very disappointing to me as well.”

House Administration ranking member Dan Lungren was adamant at the hearing that someone be held responsible.

“This report cries out for change on the administrative side, and I hope that will take place more sooner than later,” the California Republican told Hoecker and Morse. “It would be tough if you … stood here with question marks over your heads and said, ‘We screwed up and we don’t know what to do.’ But we know what to do. It’s what you did before.”

Hoecker also proposed a re-evaluation of personnel on the administrative side.

He outlined his other recommendations, as stated in the report, at the hearing: First, the department should develop a formal budget formulation process, including written policies and procedures defining each office’s role and responsibility. It should develop a yearly review of specific programs to evaluate their effectiveness. And finally, it should formalize a documented trained process for budget personnel.

Though lawmakers held hearings in March examining whether the Capitol Police should relinquish control over their own budget, Hoecker said there has since been progress and so the department should be able to move forward on its own.

Capuano alluded to some hesitancy on Morse’s part to carry out the IG’s recommendations, but Morse said he would comply.

“Chief, I’m begging you,” Capuano said. “I’m begging you take the inspector general‘s report and just do it. Do it as quickly as you humanly can, and anyone who stands in the way, get rid of them.”