Legislative Action Team Advisory

Saturday, March 04, 2006

The Budget Process - background

The Federal Budget Process
The Federal Budget process begins the first Monday in February of each year and should be concluded by October 1, the start of the new Federal Fiscal Year. In some -- make that many -- years, the October 1 date is not met. Here is how the process is supposed to work.

The President Submits a Proposed Budget to Congress
Following the procedure required by the Congressional Budget and Impoundment Control Act of 1974, the President presents a proposed budget for the coming Fiscal Year to Congress on or before the first Monday in February.
Based on the input of the Federal Agencies, the President's budget projects estimated spending, revenue, and borrowing levels broken down by functional categories for the coming fiscal year to start October 1.
The President's budget serves as a "starting point" for the Congress to consider. Congress is under no obligation to adopt all or any of the President's budget and often makes significant changes. However, since the President must ultimately approve all future bills they propose, Congress is often reluctant to completely ignore the priorities of the President's budget.

House and Senate Budget Committees Report the Budget Resolution
The Congressional Budget Act requires passage of an annual "Congressional Budget Resolution", a concurrent resolution passed in identical form by both House and Senate, but not requiring the President's signature.

The Budget Resolution is an important document providing Congress an opportunity to lay out its own spending, revenue, borrowing and economic goals for the coming fiscal year, as well as the next five future fiscal years. In recent years, the Budget Resolution has included suggestions for government program spending reforms leading to the goal of a balanced budget.
Both House and Senate Budget Committees hold hearings on the annual Budget Resolution. The committees seek testimony from Administration officials, Members of Congress and expert witnesses. Based on testimony and committee deliberations, each committee writes or "marks-up" its respective version of the Budget Resolution.

The Budget Committees are required to present or "report" their final Budget Resolution for consideration by the full House and Senate by April 1.
The full House and Senate now debate, amend, and take action on the Budget Resolution as reported to them by their respective Budget Committee.
While the Budget Act sets no deadline for this phase, it does require that a final, single version of the Budget Resolution, agreed to by both House and Senate be approved by April 15.
House and Senate Work Out Differences in Conference

Since the versions of the Budget Resolution passed by the House and Senate will always differ, each body appoints conferees -- negotiators -- to meet and resolve the differences. The "conference committee" works to come up with a single, agreed version of the Budget Resolution that must be agreed to by at least half of the conferees from both the House and Senate.
Full House and Senate Consider Conference Agreement

The Budget Act requires that by April 15, both the House and Senate approve by majority votes the final version of the Budget Resolution reported by the conference committee.
The terms of the final, approved Budget Resolution govern the remainder of the budget process for the year.

Discretionary Spending Allocations Set by Congress
As a vital part of the Budget Resolution, Congress must agree on "spending allocations" or limits on how much money can be spent on discretionary programs during the coming fiscal year and at least the next 5 fiscal years. "Discretionary" funding refers specifically to money provided each year through the allocations process. Congress exercises control over how and how much money is spent, hence the term "discretionary". Discretionary spending usually represents about one-third of total annual Federal spending. Funds for programs to which the government is pre-committed to paying, like interest on the national debt and long-term entitlements are called "uncontrollable".

These spending allocations establish aggregate totals of money that cannot be exceeded by the House and Senate Appropriations Committees during the upcoming annual spending process.
The House and Senate Appropriations Committees now take the total aggregate spending allocations from the Budget Resolution and divide the amount into thirteen "sub allocations". Quite literally, they take the total discretionary "money pie" and cut it in to thirteen pieces.
Each slice of the discretionary "pie" funds a different government function as follows:
1. Agriculture, Rural Development, Food and Drug Administration, and related agencies
2. Departments of Commerce, Justice, and State, the Judiciary, and related agencies
3. Department of Defense
4. Operations of the government of the District of Columbia
5. Energy and water resources development
6. Foreign operations, export financing, and related programs
7. Department of the Interior and related agencies
8. Departments of Labor, Health and Human Services, Education and related agencies
9. Legislative Branch
10. Military construction, family housing, and base realignment and closure for the Department of Defense
11. Department of Transportation and related agencies.
12. Treasury Department, the United States Postal Service, the Executive Office of the President, and certain Independent Agencies
13. Veterans Affairs and Housing and Urban Development, and for sundry independent agencies, boards, commissions, corporations, and offices

The Budget Act allows the Appropriations Committees from May 15 until June 10 to finalize the 13 spending bills and forward them to the full House and Senate.
House and Senate Consider 13 Annual Spending Bills
By June 10, the full House and Senate should begin consideration of the 13 annual spending bills. Other than some special rules of debate, the 13 spending bills follow the same legislative procedure as other bills. Current Status of the FY 2000 Spending Bills
House and Senate work out differences in Conference
Since the spending bills are once again being debated and amended separately, House and Senate versions will have to go through the same conference committee process as the Budget Resolution. The conferees have to agree on one version of each bill capable of passing in both the House and Senate by a majority vote.
Full House and Senate Consider 13 Conference Agreements
Once the conference committees have forwarded their agreements to them, the House and Senate must both approve them by a majority vote.
The Budget Act stipulates that the House should have given final approval to all 13 spending bills by June 30.
President May Sign or Veto Any or All of the Appropriations Bills
As spelled out in the Constitution, the President has ten days in which to decide: (1) to sign the bill, thereby making it law; (2) to veto the bill, thereby sending it back to Congress and requiring much of the process to begin again with respect the programs covered by that bill; or (3) to allow the bill to become law without his signature, thereby making it law but doing so without his express approval.
The Government Begins a New Fiscal Year
If and when the process goes as planned, all 13 spending bills have been signed by the President and have become Public Laws by October 1, the start of the new Fiscal Year. Most years, this happens.
Right Now in the Budget Process
As you can tell by looking at the table showing the current status of the 13 spending bills, the budget process was not completed by the October 1 deadline. The government is currently operating under H.J.Res. 110 - a "Continuing Resolution" authorizing spending through Oct. 14, 2000.

The Budget Calendar Summary
Before the 1st Monday in February:
President transmits proposed budget to Congress
Six Weeks Later:
Congressional committees report budget estimates to Budget Committees
April 15:Action to be completed on congressional budget resolution.
May 15:House consideration of annual appropriations bills may begin.
June 15:Action to be completed on conference committee reports.
June 30:Action on appropriations bills to be completed by House.
July 15:President transmits Mid-Session Review of the budget.
October 1:New Fiscal Year begins.


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