The term Revenue refers to income that is received by the federal government. (The executive branch also uses receipts as a term for revenue.) Revenue may be raised from a variety of different sources, although they primarily stem from individual income taxes, social insurance taxes, corporate income taxes and excise taxes. Revenue may additionally be raised by fees, tariffs, fines, bequests and gifts. Tax expenditures refer to revenues that are foregone as a result of an exemption, deduction or other exception.
Whenever legislation is enacted by Congress that provides the legal authority for an agency to spend money, it is said to be providing budget authority. The most well known form of this type of legislation that provides budget authority is the annual appropriations act. Agencies are authorized to enter into obligations by budget authority.
An obligation is any form of action that establishes a financial liability on the part of the federal government. This could include entering into a contract, submitting purchase orders, etc. Anytime an obligation is liquidated, the result is an outlay. An outlay represents the actual payment of the obligation. This commonly occurs through electronic fund transfers or in some cases, the issuance of a check or disbursement of cash. The stages in which obligations and outlays take place are known as the spending pipeline. The spendout rate refers to the rate at which funds are spent. A spendout rate can vary from one account to another as well as from program to program.
While Congress is able to exercise direct control over budget authority, its influence regarding obligations and to some degree, outlays, is indirect. It is federal agencies that ultimately determine outlay levels.
Two terms frequently associated with the federal budget include surplus and deficit. Surplus refers to an excess of revenues over outlays, while a deficit is an excess of outlays over revenues.
Congress and the president utilize baseline budgeting to analyze budget policy choices. A baseline is a set of projections for future spending and revenues that results in a surplus or deficit based on assumptions made regarding the state of the economy as well as the continuation of current policies, assuming no changes are made.
Known as the President’s Budget, this request to Congress is used as the basis for reports prepared by congressional budget committee members and staff. Appropriations hearings will be held to provide an opportunity for members of Congress to address concerns related to agency policies and programs.
Beginning in June and continuing through the month of October, both the House and the Senate work on the thirteen appropriations measures that ultimately fund the federal government.
Congressional appropriations bills must be passed by the beginning of the fiscal year in order for the government to be funded. The federal government’s fiscal year begins on October 1st, and if appropriations bills are not funded by then, Congress has the option of passing temporary stop-gap legislation that prevents the government from shutting down until appropriations bills can be finalized. When such measures are utilized they are known as Continuing Resolutions or CRs.
The need of lobbyists to track congressional schedules is largely driven by the appropriations process. This remains true even when lobbyists are not directly involved in lobbying appropriations legislation. Important policy issues that are related to a lobbyist’s main area of interest can be considered and resolved quickly.
Free standing or separate legislation that is of interest to lobbyists can also be added into omnibus measures. This occurs when two or more of the thirteen appropriations bills are combined when Congress completes appropriations action in the fall. The end of the appropriations process is a challenge for Congressional members and staff, culminating in increased workload and late night sessions. As a result, it is not uncommon for provisions to be included with little or no warning or public scrutiny at all. This is why lobbyists must build and maintain a strong rapport with and proactively educate appropriations committee members and staff regarding their areas of concern before the beginning of the appropriations season. Failure to do so can result in action occurring that can have a strong impact on a lobbyist’s area of interest without the opportunity to take action.
Title III of the Congressional Budget Act requires that the President submit his proposed budget to Congress no later than the first Monday in February. The President’s budget is actually only a request made to Congress, and Congress is under no obligation to adopt the budget or consider the recommendations of the President.
Preparation of the President’s Budget typically begins at least one year prior to the budget actually being submitted to Congress in February. The early phase of budget preparation occurs within the federal agencies. These agencies maintain ongoing contact with the Office of Management and Budget (OMB) while they formulate their budgets.
Known officially as the Budget of the United States Government, the President’s budget contains a message from the president regarding the budget, major budgetary initiatives organized by department and agency, and performance data. The budget also contains an appendix that features detailed information on specific aspects of the budget, such as current services estimates, economic assumptions, crosscutting programs and aid to state and local governments. In addition, the budget will contain historical tables that provide data on budget authority, deficits and surpluses and federal debt.
The president will also submit an annual Economic Report of the President to Congress within a few days of transmitting his budget. This report contains a report of the Council of Economic Advisers. Furthermore, the president is required by law to update his submissions. This is typically done in a much briefer Mid-Session Review; available by July 15th. The president may also choose to revise recommendations at any point during the year, beyond the Mid-Session Review. Several locations provide online access to the President’s budget documents, including the Office of Management and Budget and the GPO.
A significant portion of the budget is actually an estimate regarding the requirements that exist under law, not a request for congressional action.
To learn more about the presidential budget process, consider TheCapitol.Net’s 1-day workshop, The President’s Budget, held each year in mid-February.