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Box 5. United States: Other information required by law

The following are excerpts from the US Code, s. 1105. Other laws require even more information.

●Information on government activities and functions. When practicable, information on costs and achievements of government programmes.

●A reconciliation of the summary information on expenditures with proposed appropriations.

●Balanced statements of the condition of the Treasury at the end of the prior fiscal year, the current fiscal year and the fiscal year for which the budget is submitted if financial proposals in the budget are adopted.

●Essential information on government debt.

●A comparison of the total amount of budget outlays for the prior fiscal year, for each major programme having relatively uncontrollable outlays.

●A comparison of the total amount of receipts for the prior fiscal year, estimated in the budget submitted for that year, with receipts received in that year, and for each major source of receipts, a comparison of the amount of receipts estimated in that budget with the amount of receipts from that source in that year.

●A statement of budget authority, proposed budget authority, budget outlays, and proposed budget outlays, and descriptive information of: (a) a detailed structure of national needs that refers to the missions and programmes of agencies, and (b) the missions and basic programmes.

●An analysis displaying, by agency, proposed reductions in full time equivalent positions compared to the current year’s level in order to comply with the Federal Workforce Restructuring Act of 1994.

●Information about the Violent Crime Reduction Trust Fund.

Title 31 Chapter 11, s. 1105. Proposed expenditures and appropriations of the legislature and judiciary are required to be submitted to the President before 16 October of each year and included in the budget by the President without change.

4.2. Budget process in the legislature

Prior to the enactment of the CBA in 1974, the congressional budget process was relatively uncoordinated. The CBA provided for the first time, a framework for congressional actions on the budget. The law established the concurrent budget resolution, the House and Senate Budget Committees, the

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CBO, and procedures for relating individual appropriations to the totals agreed by Congress.

4.2.1. The timetable for budget adoption and constraints on budget debate in the legislature

The CBA specifies the congressional budget process, which co-ordinates the legislative activities on the budget resolution, appropriations bills, reconciliation legislation, revenue measures, and other budgetary legislation. Section 300 of the act provides a timetable (Box 6) so that Congress may complete its work on the budget by the start of the fiscal year on 1st October.

Adoption of the budget resolution process. After the President’s budget is received in early February, the CBA requires the budget committees to review the document and to hear the views and estimates of the authorising committees. Congress is required to pass a concurrent budget resolution, which

Box 6. United States: Legal and internal deadlines for congressional budget approval

●First Monday in February: President submits his budget (US Code, Chapter 11, s. 1105).

●15 February: CBO submits report to budget committees.

●No later than six weeks after President submits budget: Committees submit views and estimates to budget committees.

●15 April: Congress completes actions on the “budget resolution” which establishes total budget outlays (spending) and budget receipts for the upcoming fiscal year (CBA, s. 301).

●15 May: Annual appropriations bills may be considered in the House.

●10 June: House Appropriations Committee reports on latest annual appropriations bills.

●15 June: Congress completes action on “reconciliation legislation” which authorises changes in programmes and in taxes consistent with the budget resolution (CBA, s. 310).

●30 June: House of Representatives completes action on annual appropriations bills. Congress is scheduled to enact up to 13 regular appropriations bills (CBA, s. 307).

●1st October: Fiscal year begins.

Source: Henniff, 2003a.

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sets forth total discretionary spending and may include “reconciliation instructions” for committees responsible for mandatory spending and receipts. A budget resolution is a formal agreement between the two houses on total spending, receipts and other budget aggregates, and provides a notional breakdown of budget spending by function [CBA, s. 301(a)]. The budget resolution is not a law, as it does not require the President’s approval (Heniff, 2003b). The aggregate levels set forth in the budget resolution are binding, although in the absence of successor legislation to the BEA, there is no legal enforcement mechanism except for points of order that pertain to the budget resolution itself.

The budget reconciliation process for mandatory spending. The CBA provides for a “budget reconciliation” process, by which Congress issues directives to legislate policy changes in mandatory spending (entitlements) or revenue programmes (tax and other laws) to achieve spending and revenue goals envisaged in the budget resolution [s. 301(b)]. In contrast to the budget resolution, whose passage is obligatory, the reconciliation process is an optional procedure (Heniff, 2003c). In the House of Representatives, under the CBA, no amendment is in order that would increase spending or decrease revenue relative to the agreed projections without equivalent decreases in spending or increase in revenues (the PAYGO rule). In the Senate, total debate on a reconciliation bill is limited to 20 hours, although the actual time for consideration of the omnibus package often exceeds the time limit set in the CBA.

The appropriations process. Once aggregate spending levels have been determined by the budget resolution, the Appropriations Committee is given an allocation, which is divided into sub-allocations [s. 302(b), CBA] corresponding to each of the 13 appropriations sub-committees. The appropriations subcommittees in the House and the Senate may not exceed these sub-totals as they develop the annual appropriations bills. After proposing measures, each appropriations sub-committee reports to the full Appropriations Committee where proposals are considered, possibly amended, and approved, consistent with house rules. All committee actions are constrained by the overall discretionary spending limits and the allocations in the budget resolution.

In principle, once the House of Representatives completes action on the appropriations bills, the Senate begins consideration of the House’s proposals. In practice, the two houses work on the bills concurrently prior to “floor action”. Like any other law, congressional action on an appropriation measure is not complete until both the House and the Senate have successfully disposed of all proposed amendments in both houses, which eventually agree on an identical text pursuant to the Constitution.

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Constraints on budget debate in the Senate. The CBA provides for a special congressional procedure (“points of orders”)17 designed to ensure that appropriations bills and other budgetary legislation are consistent with the most recently adopted budget resolution. The Senate generally operates under the rule of unlimited debate, which means that any senator or group of senators can effectively stop a bill from being considered (known as a filibuster). A supermajority of senators (three-fifths) must approve the closing of the debate on any issue. The CBA points of order circumvent these procedural impediments by providing a waiver of the three-fifths rule (Blöndal et al., 2003). One example is a prohibition against consideration of legislation that provides budget authority, or outlays, in excess of a committee’s allocation. This point of order is often used to enforce the spending limits applicable to each of the 13 annual appropriations bills. Another point of order is a prohibition against consideration of legislation that would cause the total level of budget authority or outlays to be exceeded or the appropriate level of revenue to be reduced below that which is set forth in the budget resolution.

4.2.2. Provisional budgets

If the appropriations bills are not passed by the end of September when the new fiscal year begins, “continuing resolutions” are adopted (CRS, 2000). These provide budget authority for a temporary period of time to allow the business of government to continue. A continuing resolution is a joint resolution, which has the same legal status as a bill. The resolution usually specifies a maximum rate at which obligations may be incurred, based on the rate of the prior year or that contained in the President’s budget request. If Congress decides not to adopt a continuing resolution, or allows one to lapse, the agencies without appropriations are forced to shut down except for emergencies involving the safety of human life or the protection of property and national security. This is rare, but it does happen, usually for political reasons.

4.2.3. Powers of amendment

The President’s budget only serves as a benchmark for subsequent congressional action. Congress has unlimited power to make amendments to the President’s budget. Congress uses these powers extensively and designs its own budget. This power is founded in the Constitution that states that “no money shall be drawn from the Treasury, but in consequence of appropriations made by law”.

4.2.4. Approval of resources

The Constitution states that the Congress shall have power to lay and collect taxes, duties, imposts and excises to provide for defence and general welfare. All measures raising revenue including taxes, duties and user fees are

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required to have a legal authority that should originate in the House of Representatives. The budget resolution includes total revenue as guidance for the congressional budget process. The resolution may direct changes in the Tax Code.

4.2.5. The nature, structure and duration of appropriations

A distinction between discretionary spending and mandatory spending is important to understand the nature, duration and structure of appropriations. Spending for discretionary programmes is determined in annual appropriations, which provide legally binding upper limits for spending. Spending for entitlement programmes is determined by their enabling laws and is generally not affected by the appropriations process. Mandatory spending has the nature of permanent appropriation. Only about 35% of total federal spending is controlled through the annual appropriations process.

Appropriations laws provide “budget authority”, which authorises the federal government agencies to incur legally binding obligations and the Treasury Department to make payments for designated purposes. Appropriations are usually used or committed in the fiscal year for which they are provided, unless the appropriations law and the authorising law specify that they are available for a longer period.

Approved appropriations are by “accounts”. There are some 1 000 appropriation accounts, which are often subdivided into different programmes within agencies. There are generally separate accounts for larger capital expenditures and transfers. A “salaries and expenses” account may cover several programmes in a given department. In approving funding, Congress may earmark portions of appropriations for specific purposes. While the previous year’s appropriation structure provides the basis of the next year’s appropriations, the detailed appropriation structure varies from year to year. The appropriation structure is quite complex, reflecting the high degree of control exercised by Congress in the approval process. The detailed and unstable appropriation structure contrasts with the international trend to group expenditures into a few appropriations where programme outcomes are the focus at the legislative approval stage, not approval of individual projects and other inputs.

4.2.6. Carryover of appropriations and borrowing of future appropriations

Unspent appropriations for operations costs are returned to the Treasury at the end of the year. Only in exceptional circumstances is limited end-year carryover permitted. For instance, up to 50% of salaries and expenses of selected agencies may be carried over with the approval of the legislature.

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Congress writes into appropriations acts the extent of the end-year carryover. However, money can be disbursed for up to five years from the fiscal year in which it was committed, and if the legislation provides, obligations can be made for even longer periods.

Under certain circumstances, departments and agencies can incur obligations against the coming fiscal year’s anticipated appropriations. Appropriations acts provide a different starting date for some appropriation accounts within the relevant act, so that the funding cycle does not coincide with the fiscal year generally covered by the act. There are three types of this kind of funding (Streeter, 2000):

●Advance appropriations. Funding becomes available for one or more fiscal years after the fiscal year covered by the act. An advance appropriation for fiscal year (n+1), included in an appropriations act for FY (n) would be included in the budget for FY (n+1), not FY (n).

●Forward funding. Such funding generally becomes available for meeting obligations in the last quarter of the fiscal year and the availability continues during the following fiscal year. The funds would be recorded in the subsequent fiscal year since most of the funding would occur then.

●Advance funding. This is funding that authorises obligations late in the fiscal year. Advance funding is used, inter alia, to fund benefit payments that are difficult to predict, such as unemployment compensation. If advance finding is used, the budget authority for that fiscal year is increased by the amount committed and budget authority for the succeeding fiscal year is reduced by that amount.

4.2.7. Public debt approval

The authority to borrow is vested in Congress by the Constitution: “Congress shall have power to borrow money on the credit of the United States” (Art. I, s. 8). In 1917, in the face of more frequent government financing needs during World War I, Congress, in conjunction with the Second Liberty Bond Act, delegated authority to the Treasury Department to borrow, subject to a limit. Since then, the definition of debt subject to limitation has been modified. The definition includes not only the debt held by the public, but also the notional credits in the government trust funds, of which social security is the largest.18

The statutory limit is changed by normal legislative procedures when necessary, for example, when the proposed federal deficit requires a higher debt limit to accommodate new borrowing (Senate Budget Committee, 1998b). The annual congressional budget resolution includes a provision specifying an appropriate level of debt subject to a limit at the end of each fiscal year. Under a rule adopted by the House of Representatives, when the budget resolution is