UNIT 8: The Federal Budget Process

Professor Schoepp

Budget Process and Politics

• To budget is to fight over money• There will always be friction among

congressional committees and between those who make tax policy and control spending

• The budget process is the means by which this conflict is channeled to enable agreement each year

• There is no federal budgeting devoid of politics

Authorization vs. Appropriation

• Authorization is writing the law– Authorization is policy guidance. It establishes a framework including

what should a program do, where should it be located, etc.

– These bills authorize the federal government to do something, such as implement marine protected areas off the West Coast or amend the tax code, etc.

– The authorization bill merely says the government CAN spend the money on this purpose if it so chooses.

• Appropriation is cutting the check– Any agency or program needs language in an appropriation bill to actually

get the money

– Appropriations bills are key to making things happen because federal actions require money. Even though most policy guidance is contained in authorization bills, policy can also be modified through the appropriations

process.

Federal Spending

Social Security23%

Medicare12%

Medicaid7%

Interest10%

Other Mandatory7%

Non-defense Discretionary

19%National Defense

16%

Other entitlements6%

Source: 2002 Citizen’s Guide to the Federal Budget, www.whitehouse.gov

The Federal government spends $2 trillion a year

Federal Spending

• Non-defense Discretionary ($380,000M)– Public Housing ($24,000M)– Transportation/Highways ($20,000M)– Veterans Health ($18,000M)– NASA ($14,000M)– NIH ($12,500M)

• NOAA total = $3,325M– Sea Grant total = $65M

• Other (NSF $5,481M; ONR Basic Research $456M)

Budget Cycle

President’sBudget

Congressional Budget Action

Implementation

Audit and Review

•adoption of budget resolution•passage of annual appropriations bills

(Activities related to a single FY stretch over a period of 2.5 calendar years)

President’s Budget

• The President’s budget must be submitted to Congress no later than early February of each year

• The President’s budget is only a request to Congress. Nevertheless, the power to formulate the budget is a vital tool in direction of the executive branch and of national policy.

• The President’s proposals often influence congressional revenue and spending decisions, the extent of the influence varies from year to year and depends more on political and fiscal conditions than on the legal status of the budget.

NOAA Internal Process

NOAA and OMB

• The Office of Management and Budget (OMB) is an extension of the White House. OMB operates the executive budget system and advises the President on expenditure of funds.

• As agencies formulate their budgets, they maintain on-going contact with OMB budget examiners

• Agencies ask for more than OMB can give them• Levels of review: staff, directors, passback, appeals, final decisions• Passback is when agencies are notified of OMB’s decisions• OMB regulations provide for confidentiality in all budgets before

transmittal to Congress

Budget Resolution

• Begins just after submission of the President’s Budget

• The Budget Resolution is Congress’s take on where (not how) to spend money

Just as an individual has to allocate money among rent, food and insurance, the federal government allocates its money between items such as national security, environmental protection and education (divided up between 13 appropriations bills)

• Congress can provide more or less funds that the President has requested or make changes in tax laws

• Deadline is April 15th

1. Agriculture; 2. Commerce, Justice, State and the Judiciary; 3. Defense; 4. District of Columbia; 5. Energy and Water; 6. Foreign Operations; 7. Interior; 8. Labor, Health & Human Resources and Education; 9. Legislative Branch; 10. Military Construction; 11. Transportation; 12. Treasury-Postal; 13. Veterans Affairs-HUD and Independent Agencies

Budget Resolution

• Each appropriation subcommittee can spend only what the Budget Committee has approved for that particular bill or function - their Allocation.

• If a member wants to increase funds for a program, for the most part, they can only do so by cutting funding in another program funded through that bill.

• Functional categories are recommendations only• Three numbers that matter:

– Total allocation (302a)– Entitlements (level is set by law, resolution makes

judgement call on Pres. Budget mark)– Revenues

• Reconciliation rules matter

Appropriations Process

• In the fall of each year, you often hear that Congress is trying to pass the federal budget. It is the appropriations bills that Congress is usually frantically trying to pass before their October 1st deadline (the beginning of the fiscal year)

• If Congress fails to pass the appropriations bills by October 1st, they must pass a “CR” or continuing resolution. This allows the government to continue operating with funding at the level of the previous fiscal year.

Appropriations Season

• Sea Grant Association Campaign– President’s Mark– SGA appropriations letters/Dear Colleague– SGA Spring meeting/Congressional visits– Finalize Signatures on Letter - send to Appropriators

• Special Member Requests– Members of the Appropriations Committee submit

these to leadership of the Committee– Can Include earmarks or general requests– Ask about this for members of your delegation that sit

on the Appropriations Committee and will not sign our Delegation letter

• All Leads to: Development of Appropriations Bills

The Path of an Appropriations Bill through Congress

H o u se f lo o r a c tio n .

F u ll co m m itte e m a rku p an d re p o rt(H .R . 1 2 34 , H o u se R ep o rt 1 0 3 -1 1 1)

S u bco m m itte e he a rin g s a n d m arkup

S e na te f loo r a c tio n .

F u ll co m m itte e m a rku p an d re p o rt(H .R . 1 23 4 , S e na te R e po rt 10 3 -1 1 1)

S u bco m m itte e he a rin g s a n d m arkup

CONFERENCE

Conference Report Approved by House(House Report 103-222)

Conference Report Approved by Senate

Enrolled bill sent to president for approval

(P.L. 103-444)

HOUSE SENATE

Schick, 1995. The Federal Budget: Politics, Policy, Process

Supplemental Appropriations Bills

• In addition to the regular appropriations bills• Passed before the President’s annual budget to pay for

unanticipated matters occurring in the current fiscal year.

– For example, Congress passed a supplemental appropriations bill in the fall of 2002 to cover the costs of the September 11th disaster. Other, less dramatic examples of items funded by supplemental appropriations bills include damage due to hurricanes and fishery buybacks.

Rescissions

• To rescind is to take money from an account• Can be either initiatives of Congress or a Federal

Department/Agency• Congressional

– Example: FY03 -0.065% government-wide

– Example: FY03 Sea Grant appropriation -$2M in unobligated balances

• Agency or Department– Many forms (reprogramming, deobligation actions)

– Limited to $500K without Congressional approval

– Example, reprogramming: FY1999, $125 million was appropriated for the Emergency Oil & Gas Program. Loans totaling less than $5 million were made and DOC requested to reprogram $115 million.

• Departmental or Agency initiatives must be requested of (approved by) the Appropriations committee

“Determining the federal budget is one of the most important political processes of our time.”

Thank you!

-Bruce MacLaury(Brookings Institution President)