Council on Undergraduate Research

Federal Budget and Appropriations

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The Federal Budget and Appropriations Process

There is a basic divide regarding Congressional Committees: authorizers and appropriators. The authorizing committees (such as the House Education and the Workforce Committee and the Senate Health, Education, Labor and Pensions Committee) are the primary authors of federal programs under their respective jurisdictions. Appropriators decide how much money is spent on those programs. 

When creating a new federal program, authorizing committees either make it a mandatory or a discretionary spending program. A mandatory spending program creates what is know as an entitlement – meaning that the federal government spends enough money to cover the program’s obligations regardless of the cost. Entitlements include Social Security, Medicaid, several student loan programs and other similar programs.

For the most part, all other programs are discretionary programs – meaning that each year the federal government decides how much funding that program receives. This is where the split between authorizers and appropriators comes into play. Authorizing committees set maximum levels of funding, called authorizations, but they do not make any decisions on annual funding, that is the appropriators’ responsibility. 

Each year, the House and Senate Appropriations Committees determine how much money each discretionary program receives. This process begins with the President’s State of the Union and Budget Request in early February and funding decisions are finalized, ideally, before the start of the next fiscal year on October 1. The following is a month by month guide of the major landmarks in the budget and appropriations process.

In January, Congress convenes for either a new Congress or the second session of an existing Congress1. The first several days consist of “housekeeping” and organizational activities. At this time, many Representatives and Senators make public statements that set broad priorities for the coming legislative session. This provides some, albeit general, insight into how the coming months will unfold. 

In late January or early February, the President gives his State of the Union address to a joint session of Congress. This speech sets the President’s priorities for the coming year. While is does not provide specific funding recommendations, it does offer insight into the overall fiscal environment and if the President plans on introducing new programs, reforms, etc2. The State of the Union address informally begins Congress’ work period for year. 

In early February, the President submits his budget request for the coming fiscal year. This collection of documents makes funding requests for all federal discretionary programs in all agencies. It also provides details on new programs and reforms the Administration would like to see implemented, including those under the jurisdiction of authorizing committees. While the recommendations are not automatically accepted by Congress, they often form the basis for future appropriations discussions.

Accompanying the budget request are several supporting documents including the Office of Management and Budget’s (OMB) Program Ratings Assessment Tool (PART). Over the past few years, the PART has become the main evaluation tool the Administration uses to evaluate the efficacy of all federal programs and the basis for its appropriations recommendations.

The President’s budget request is extensively studied and members of Congress begin to form their opinions on the issues. For instance, if a Representative’s favorite education program is recommended to be cut, then he or she knows that working to “restore” funding to it will be a main priority for the coming months. 

During this time, Congressional Committees hold hearings on the appropriations recommendations as well. For the appropriators, the hearings involve appropriate representatives of the administration explaining and defending the budget request, such as the Secretary of Education. Other hearings involve witnesses from the general public and the opportunity for other members of Congress who do not sit on the committee in question to formally submit their opinions. These hearings occur in Appropriations Subcommittees and in authorizing subcommittees. 

Authorizing committees often hold hearings on the budget request that focus on the program-level changes proposed. For instance, in the FY2006 budget request, President Bush introduced a new “High School Initiative” that combined several existing discretionary programs. The House Education and the Workforce Committee held a series of hearings on the topic. 

In February, the Congressional Budget Office (CBO) releases its annual “Budget Options” report. CBO is a nonpartisan resource that provides Members of Congress with estimates of how much bills cost (called scoring) and other budget-related information. The Budget Options report provides Congress with solutions to change revenue and spending targets for the coming fiscal year; along with how much each individual action will cost or save. 

March – April – May 15
During this time hearings on the budget and annual appropriations continue, but the primary focus shifts to the House and Senate Budget Committees. These committees draft their respective chambers’ budget resolution. The budget resolution sets an overall spending figure for discretionary programs for the coming fiscal year3. The budget resolution is not a law, but sets a guideline for appropriators to follow. It is important to note that the budget resolution does not include any specific program funding decisions, although may Members of Congress “assume” funding decisions into the resolution.

The budget resolution can also call for “budget reconciliation.” Budget reconciliation is the process where authorizing committees are directed to make a specific amount of cuts to mandatory spending programs under their jurisdiction by a specific deadline. The reconciliation language in the budget resolution does not determine what mandatory spending programs should be cut, only that cuts must be made.

Once the committees pass legislation that makes these cuts out of their committee, they are packaged together with other committees’ bills into a large reconciliation bill. On the House and Senate floor, these large reconciliation bills enjoy certain parliamentary protections, the most significant of which is that the Senate cannot filibuster the bill.

Another significant parliamentary issue is that the reconciliation bills must contain only legislative langue that relates to revenue and savings in mandatory programs. This provision enforces in the Senate under what is known as the Byrd Rule. The Byrd rule, named after Senator Robert Byrd (D-WV), allows any Senator to object to a part of the reconciliation bill if it makes non-monetary changes to current law. To overcome this challenge, 60 Senators must vote against the point of order. 

Establishing a budget resolution allows the chairman of the Appropriations Committee to give his subcommittee chairman – called “Cardinals” – individual allocations, called 302(b) allocations. By passing a budget resolution, any amendments that increase spending over the budget resolution or the caps set in the 302(b) allocations are subject to a point of order – meaning that amendments must either include offsets or have enough votes to carry through. This parliamentary protection is what makes passage of the budget resolution so important.

May 15
Under law, Congress has until May 15 to pass a budget resolution. If they fail to pass one, the Appropriations Committees can bring their appropriations bills to the floor of their respective chambers. 

What happens if the House and Senate cannot agree on a budget resolution by May 15? Without limits on discretionary spending, any of the appropriations bills that are brought to the floor are subject to any amendments without regard to cost. If the budget resolution appears deadlocked, then Congress often includes a “deeming resolution” in the first of their appropriations bills4. The deeming resolution includes discretionary spending caps that create parliamentary protection against amendments that violate the budget cap5. Deeming resolutions cannot include language that calls for budget reconciliation.

May 16-June-July
This is the period when the House and Senate begin significant action on appropriations bills. The House Appropriations Committees typically acts first with the Senate acting later in the summer. For each appropriations bill, the House and Senate go through the following parallel processes using the Labor, Health and Human Services and Education (Labor-HHS-Education) bill as an example. 

Subcommittee Mark Up
This is when the House and Senate release actual program funding numbers for the Labor-HHS-Education bill. The actual bill language includes funding levels for all programs within the subcommittee’s jurisdiction as well as any other legislative language regarding use of discretionary funding. 

From this point, and every subsequent step in the process, these numbers become more difficult to change. At the subcommittee mark up, the chairman introduces his appropriations recommendations and the bill is subject to amendments by other members of the subcommittee. Given sufficient votes, the bill is passed out of subcommittee and moves on to the full Appropriations Committee. 

Appropriations Committee Mark-Up
This is similar to the subcommittee mark up, only that all members of the Appropriations Committee have the opportunity to offer amendments. Upon successful passage of the bill, the Appropriations Committee drafts report language that accompanies the bill. The report language explains why the committee did what it did and also provides further clarification on technical matters.

Floor Consideration
This is when all members of Congress debate the bill and have the opportunity to offer amendments on it. Debate and amendments are “managed” on the floor by the respective Chairman and Ranking Member of the bill in question. For instance, for the Labor-HHS-Education bill, debate would be managed by Senators Harkin (D-IA) and Specter  (R-PA), and Representatives Obey (D-WI) and Walsh (R-NY).

After the House and Senate have passed their respective Appropriations bills, their differences must be negotiated via what is known as “conference.” Party leadership senior appropriations members are appointed from the House and Senate to work out the differences between the two bills, with the majority party in firm control of the proceedings. The result of the negotiation process is a final conference report that contains final funding decisions.

This conference report needs to be passed by both the House and Senate before it can be signed by the President and made law.

If the budget resolution contains reconciliation language, authorizing committees work to meet their reconciliation instructions during this time. If a committee is directed to make cuts, the committee will hold hearings, introduce and mark up legislation that meets those instructions. The Congressional Budget Office is the ultimate arbiter deciding if legislation passed out of the committee saves as much as members on the Committee claim. 

Congress typically takes off the entire month of August and returns after Labor Day for “district work.” This is a very slow time on Capitol Hill with very little going on in public, but there are many backdoor conversations and negotiations between staff.
Ideally, this is when Congress finishes work on all of their appropriations bills before the start of the fiscal year, October 1. In an effort to meet the deadline, several appropriations bills are often combined into one “omnibus” appropriations bill. For instance in FY2005, the Consolidated Appropriations Act of 2005 included the Agriculture; Commerce, Justice and State; Energy and Water; Foreign Operations; Interior; Labor-HHS-Education; Legislative Branch; Transportation and Treasury; and the Veterans Affairs, Housing and Urban Development and Independent Agencies appropriations bills.

Omnibus appropriations bills are used because they make final passage easier for two reasons: (1) it saves time of debating individual bills and (2) it makes it more difficult for Members of Congress to vote against individual bills because voting against one bill becomes voting against several bills. 

During September authorizing committees complete their work to fulfill their budget reconciliation instructions. If a committee does not meet its instruction, the Budget Committee in the respective chamber will work with the authorizing committee in question to offer an amendment that meets the instruction when the final reconciliation bill is debated on the chamber’s floor.

After all bills have been reported out of committee, the House and Senate Budget Committee’s assemble a final reconciliation bill and manage its passage on the floor. After reconciliation bills have passed both the House and Senate, a final bill is conferenced, ratified and sent to the President in a similar fashion to any other piece of legislation.

October - ?
If Congress has not completed is annual appropriations work by October 1, then it must pass a “continuing resolution” or else federal agencies without appropriations bills signed by the President will be forced to shut down due to lack of funds. Continuing resolutions fund federal agencies at the levels equivalent to the previous year for the length of the resolution6. This allows individual programs and agencies to function in a similar manner as the
previous year.

Continuing resolutions (commonly referred to as a “CR”) can be for a matter of a few hours or for an entire fiscal year. If Congress believes it needs a little extra time to complete its work, the CR may last for a few weeks. If Congress feels it is inevitably deadlocked they may pass a year-long CR and start over for the next fiscal year (commonly referred to as “punting”) in an attempt to bring about some sort of consensus that has enough votes to pass.

1 A “Congress” occurs every two years and coincides with elections in the House of Representatives.
2 For instance, this year’s state of the union focused heavily on Social Security reform.
3 In essence, this number establishes how big the federal government’s wallet is. It does not establish how it spends its money.
4 Usually this is a defense or national security-related bill that moves relatively quickly and with some level of bipartisan support.
5 Meaning that a majority in either the House or the Senate needs to agree to violate the budget cap.
6 For instance, if a program receives $52 million dollars of funding every year and Congress passes a one week continuing resolution, the program has the ability to spend $1 million for the week.

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