Your Federal Budget Cheat Sheet

Earlier today, President Obama sent his Fiscal Year (FY) 2016 budget proposal to Congress. In Washington, words like “appropriations” “budget outlays” and “authorizations” are quite popular during the budget season. Yet we know that America’s educators are hard at work, and may not have the time to tune in to CSPAN to keep up with the budget process. So consider this your federal budget cheat sheet.

The President’s Proposal

B82qQQDCYAI8_5U520On the first Monday in February, the President sends his budget proposal for the next fiscal year (which starts on October 1) to Congress. The President’s Budget reflects his and his Administration’s priorities, and begins the budget process.

In the weeks after receiving the President’s proposal, Congress holds hearings to receive testimony on the Budget proposal from a wide range of officials, experts and the public.  The committees then send the Budget Committees their ‘‘views and estimates’’ on appropriate spending or revenue levels for the programs included in the Budget.

Budget Resolution

In the spring, the normal budget process would see Congress pass a budget resolution, which originates in the Budget Committees, and reflects Congress’s budget priorities. Among other things, a budget resolution:

  • Estimates what the federal government is going to spend in the next several fiscal years (total spending)
  • Lays out how much money the federal government needs to bring in to pay for the projected spending (total revenues)
  • Identifies projected deficits or surpluses

The budget resolution also includes the levels of budget authority and outlays (the amount actually spent) to be allocated to each of the twelve appropriations subcommittees.

If passed, a budget resolution is not binding, it merely lays out a path for passing annual appropriation bills. At times it will match the President’s priorities, and at other times the resolution can be at odds with the President’s proposal.

Discretionary and Mandatory Spending

Discretionary spending makes up about a third of federal spending and consists of programs that Congress and the President must give the authority to spend through the appropriations process (see below).

Mandatory spending consists of programs like Social Security, Medicare, Medicaid, student loans and veterans’ benefits. Congress can only change mandatory spending levels by changing the programs themselves through passage of a new law.

Authorizing and Appropriating

For the most part, federal agencies can’t spend money unless Congress authorizes and appropriates it. Authorizing Committees allow federal programs to be created and funded by passing an authorizing bill.

However, authorization of a program doesn’t mean there is money to fund the program. It is the Appropriation Committees, that decide on how much money can be spent based on how much is authorized.

In normal budget years, the House and Senate should pass the twelve appropriation bills in early summer, then the House and Senate will work out the differences (through a Conference Committee), and pass appropriation bills that are sent to the President to sign or veto before the start of the new fiscal year on October 1.

Continuing Resolutions

If Congress cannot pass its appropriation bills before the fiscal year begins, it may be necessary for Congress to provide a short-term funding solution called a continuing resolution (or CR). The continuing resolution keeps the government running until the appropriation bills can be passed. Continuing resolutions often fund the government at the same levels of the previous fiscal year.