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in violation of the law. He/she also reports on the adequacy and effectiveness of administrative audits of accounts and claims in an agency and on the inspections by an agency of offices and accounts. When the Comptroller General submits a report to Congress, he/she delivers copies of the report to the appropriations committees of each house, the Committee on Governmental Affairs (Senate), the Committee on Government Operations (House of Representatives), and the committee of Congress that requested information on the execution of a programme or activity of a department or other agency.

4.5.6. Enforcement of findings

When the Comptroller General makes a report that includes a recommendation to the head of an agency, the head of the agency must submit a written statement on action taken on the recommendation (s. 720). A 60-day limit for the submission of such statements to house committees is specified.

5. Sanctions and non-compliance

Titles 13 and 15 provide sanctions against overspending appropriations and provide penalties in case of non-compliance. First, a federal government officer may not make or authorise expenditures or obligations exceeding amounts available in an appropriation or fund. Nor may government employees involve the government in a contract or obligation for the payment of money before an appropriation is made unless authorised by law (s. 1341). Second, a government officer may not make or authorise an expenditure or obligation exceeding the amount apportioned by the OMB (s. 1517). Third, a government officer may not make or authorise an expenditure or obligation exceeding an allotment or sub-allotment (subdivisions of funds made by the Secretary of the Department below the OMB apportionment).

A government employee who violates s. 1341(a) is subject to administrative discipline including suspension from duty without pay or removal from office (s. 1349). If an officer or employee knowingly and willfully violates s. 1341(a), he/she can be fined up to a maximum of $5 000, imprisoned for up to two years, or both (s. 1350). The same rule applies to an officer or employee violating s. 1517.

Notes

1.This chapter is mainly limited to federal government budgeting processes. Each state has its own constitution and set of budget laws.

2.The Office of Management and Budget lists eight principal laws as the basic laws governing the federal budget process (OMB, 2004a): the Constitution; the Antideficiency Act 1905; Chapter 11 of Title 31, United States Code; the Congressional

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Budget and Impoundment Control Act 1974; the Balanced Budget and Emergency Deficit Control Act 1985; the Budget Enforcement Act 1990; the Federal Credit Reform Act 1990; and the Government Performance and Results Act 1993. By contrast, the Congressional Research Service lists 18 laws as governing financial management, budget and accounting in the federal budget, including most of the laws in Box 1 (CRS, 2001).

3.The BEA’s most important provisions, namely the caps on discretionary spending and the PAYGO rules for mandatory spending and revenue legislation expired at the end of fiscal year 2002 (30 September). The rest of the act is still an integral part of the federal budget process. See, for example, CBO, 2003.

4.The United States Code is the codification by subject matter of the general and permanent laws of the United States based on what is printed in the Statutes at Large. It is divided by broad subjects into 50 titles and published by the Office of the Law Revision Counsel of the House of Representatives. Hereinafter, all United States Code references are abbreviated to “Title X”.

5.For more information, see Schick, 2002, and Senate Budget Committee, 1998a.

6.In the early 1970s, President Nixon repeatedly asserted authority (as had many of his predecessors) to withhold from federal agencies money appropriated by Congress. By 1973, it was believed that the President had impounded “excessive” amounts of spending previously approved by Congress.

7.In 1987, the Supreme Court ruled that the provision of GRH Act that vested certain powers in the GAO violated the separation of powers doctrine of the Constitution. Congress enacted the Balanced Budget and Emergency Deficit Control Reaffirmation Act which corrected the constitutional flaw in the GRH Act by assigning all the sequestration responsibilities to the OMB.

8.Initially set to expire in 1995, the procedures were extended twice – in 1993 and in 1997 – as part of two subsequent multi-year deficit-reduction agreements that also aimed at reducing or eliminating deficits. In each extension, the basic framework of the BEA was continued without major substantive changes.

9.Proposals include: reinstituting discretionary caps and PAYGO (excluding revenue legislation) for 2005-09, stricter standards for emergency designation in the BEA, changed requirements for the baseline, and line-item veto. Such proposals were included in the President’s 2005 budget proposal (www.whitehouse.gov/omb/budget/ fy2005/pdf/spec.pdf). See also CBO, 2003.

10.The PART consists of four sets of about 30 questions. The first set gauges whether programme design and purposes are clear and defensible. The second set involves strategic planning and weighs whether the agency sets valid annual and longterm goals for programmes. The third set rates agency management of programmes, including financial oversight and programme improvement efforts. The fourth set of questions focuses on programme results and reporting with accuracy and consistency.

11.In 1995, Congress passed the Line-Item Veto Act, which gave the President a statutory equivalent of a line-item veto. The act was challenged in the courts, and in June 1998 the Supreme Court ruled that the act violated the Constitution by permitting the President to unilaterally cancel spending without the agreement of Congress.

12.Including the Department of Homeland Security, created by the Homeland Security Act 2002 which is 187 pages long. The law’s length is an indicator of the

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extent to which Congress specifies functions and organisational structures in government.

13.See www.house.gov/rules/RX.htm for Rules of the House, and http://rules.senate.gov/ senaterules/rule25.htm for Standing Rules of the Senate.

14.For a discussion of state tax expenditures, see Mikesell, 2002.

15.For a more general discussion of contingent liabilities and other sources of fiscal risk, see GAO, 2003.

16.The Omnibus Budget Reconciliation Act of 1990 added a new Title V to the CBA, notably the “Federal Credit Reform Act of 1990”. The four stated purposes of the FCRA are to: 1) measure more accurately the costs of federal programmes; 2) place the cost of credit programmes on a budgetary basis equivalent to other federal spending; 3) encourage the delivery of benefits in the form most appropriate to the needs of beneficiaries; and 4) improve the allocation of resources among credit programmes and other spending (s. 501).

17.CBA points of order are a device by which any member of Congress can object to an amendment or a piece of legislation on the grounds that it is not within the limits set out in the budget resolution. For more discussion on this issue, see Heniff, 2001a, and Heniff, 2001b.

18.The US Treasury has noted that this definition lacks economic coherence, as it includes government “debt” owed to itself, but does not include a full measure of the government’s unfunded liabilities. See National Debt fact sheet, www.ustreas.gov/education/faq/markets/national-debt.html#q1.

19.The original Impoundment Control Act permitted the President to defer funds for policy reasons.

20.For more information, see the Internet site of the Department of the Treasury, www.fms.treas.gov/aboutfms/welcometofms.html.

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Briffault, Richard (1996), Balancing Acts: The Reality behind State Balanced Budget Requirements, The Twentieth Century Fund Press, New York.

Buchanan, James (1997), “The Balanced Budget Amendment: Clarifying the Arguments”, Public Choice, Vol. 90, Kluwer Academic Publishers, Dordrecht, The Netherlands, pp. 117-138.

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(42 2004 05 1 P) ISSN 1608-7143 – No. 53981 2005

OECD Journal on Budgeting

Special Issue

The Legal Framework for Budget Systems

AN INTERNATIONAL COMPARISON

The legal basis for budget processes and budget actors varies enormously across OECD countries. For example, the United States has a dozen major laws to support federal government budget processes, while Denmark and Norway have never adopted any such law.

To understand this situation, this book compares legal frameworks for budgeting in 13 selected OECD countries. It presents detailed case studies of national budget system laws and identifies why the legal frameworks differ so much. The book also looks at theories of public finance and constitutional political economics, and discusses norms for an optimum legal framework.

With a focus on similarities and differences in formal laws (constitutions and statutes relating to the budget system), the comparative analysis will be useful for any government planning to reform its budget laws.

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