Monday, January 3, 2011

Budget Bewilderment

It’s a new year and time for a new budget! President Obama is expected to release his federal budget request for 2012 in early February. This makes for a confusing navigation of budgets, though. You see, Congress may receive the President’s request for the fiscal year (FY) 2012 budget before they have even passed the FY 2011 budget, despite the fact that FY 2011 started three months ago. And this means that most agencies are operating at FY 2010 levels. Whew!

The budget process itself is dizzying. For one, what is the fiscal year? Unfortunately, the fiscal year is not concurrent with the calendar year, which just confuses everything. The fiscal year begins October 1 of the previous year and ends September 30 of the following year. So FY 2011 began October 1, 2010 and will end September 30, 2011. Ideally, the FY 2011 budget, the layout for how much money government agencies receive for that fiscal year, should have been passed by the two chambers of Congress before the fiscal year began on October 1, 2010, but that is rarely the case, especially in an election year.

There is a lot for the chambers of Congress to get through and agree upon before they can pass the budget. After receiving the President’s budget request, the House and Senate Budget Committees each develop a budget resolution, which is a ceiling for how much money Congress can spend in certain categories, or “functions”. This is the allocations process. Then, each chamber debates the budget resolution. Finally, a House-Senate conference resolves the differences between the House and Senate resolutions, and the conference report must be passed by both houses. This is all supposed to be accomplished by April 15th, but rarely makes that mark.

Although the budget resolution is an incredibly important step, it’s not a bill and doesn’t actually give any money to anyone, but sets the spending limit for government functions. Legislation for spending, or appropriations bills, must also be passed in the House and the Senate and the spending must fall within the allocations laid out in the budget resolution.

Because the FY 2011 budget is not yet decided upon, you may have heard words thrown around like “continuing resolution,” “omnibus” and “government shutdown.” Technically, if appropriations have not been made by the beginning of a fiscal year, the government agencies should not be able to continue work and would shutdown. However, in these circumstances, Congress usually passes a continuing resolution for a set amount of time, perhaps another month, so that the government can continue operating at the previous year’s levels while Congress continues to work on an appropriations bill. For FY 2011, Congress has passed four continuing resolutions, the most recent lasting until March 4, 2011, halfway through the fiscal year!

Oftentimes, when appropriations have not been made before the start of the fiscal year, the spending is combined into one large omnibus appropriations bill rather than separate bills. Congress just withdrew an omnibus bill for FY 2011 in favor of a continuing resolution in order to avoid a government shutdown. Now the incoming Congress will have to finish the FY 2011 budget and start debating the FY 2012 budget nearly simultaneously.

Let’s hope this year’s budget process goes a little more smoothly than last.

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