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existing and proposed new programs. It may also act upon legislation determining taxes and other means of increasing receipts. In making appropriations, the Congress does not normally vote on outlays directly, but rather on budget authority. The Congress first enacts legislation that authorizes an agency to carry out a particular program and, in some cases, sets a limit on the amount that subsequently can be appropriated for the program. Many programs are authorized for a specified number of years, or even indefinitely; other programs, such as nuclear energy programs, space exploration, defense procurement, foreign affairs, and some construction programs, require annual authorizing legislation. The granting of budget authority is usually a separate, subsequent action. Generally, budget authority becomes available each year only as voted by the Congress. However, in a significant number of cases, the Congress has voted permanent budget authority, under which funds become available annually without further congressional action. Most trust fund appropriations are permanent, as are a number of Federal fund appropriations, such as the appropriation to pay interest on the public debt. Congressional review of the budget begins when the President transmits his budget estimates to the Congress within 15 days after the start of each new session in January, as required by law. Under the procedures established by the Congressional Budget Act, the Congress considers budget totals prior to completing action on individual appropriations. The act requires that each standing committee of the Congress submit reports on budget estimates to the House and Senate Budget Committees by March 15; and that the Congressional Budget Office submit a fiscal policy report to the two budget committees by April 1. This is followed, no later than May 15, by the adoption of the first concurrent budget resolution, containing Government-wide budget targets of receipts, budget authority, and outlays to guide the Congress in its subsequent consideration of appropriations and revenue In easureS. Congressional consideration of requests for appropriations and for changes in revenue laws are considered first in the House of Representatives. The Appropriations Committee, through its subcommittees, studies the proposals for appropriations and examines in detail each agency's performance. The Ways and Means Committee reviews proposed revenue measures. Each committee then recommends the action to be taken by the House of Representatives. As the appropriation and tax bills are approved by the House, they are forwarded to the Senate, where a similar review process is followed. In case of disagreement between the two Houses of the Congress, a conference committee (consisting of Members of both bodies) meets to resolve the issues. The report of the conference committee is returned to both Houses for approval. When the measure is agreed to, first in the House and then in the Senate, it is ready to be transmitted to the President in the form of an enrolled bill, for his approval or veto. After action has been completed on all money bills, the Congress will, by September 15, adopt a second concurrent resolution. The resolution adopted by the Congress will contain budget ceilings classified by function for budget authority and outlays, and a floor for budget receipts. This resolution may retain or revise the levels set earlier in the year, and can include directives to the appropriations committees and to other committees to recommend changes in new or carryover authority or entitlements. Similarly, the second resolution may direct the appropriate committees to recommend changes in budget receipts or in the statutory limit on the public debt. Changes recommended by various committees pursuant to the second budget resolution are to be reported in a reconciliation bill (or resolution, in some cases) on which the Congress must complete action by September 25, a few days before the new fiscal year commences on October 1. After the Congress completes action on the reconciliation bill or resolution, it may not consider any spending or revenue legislation that would breach any of the levels specified in the second resolution. The Congress would only be able to pass a supplemental appropriation that would cause budget authority or spending to rise above, or reduce receipts below, the second resolution's totals if it adopts a new budget resolution changing the levels set by the second resolution. If action on appropriations is not completed by the beginning of the fiscal year, the Congress may enact a “continuing resolution” to provide authority for the affected agencies to continue operations until their regular appropriations are enacted.
Budget execution and control.-Once approved, the budget becomes the financial basis for the operations of each agency during the fiscal year.
Under the law, most budget authority and other budgetary resources are made available to the agencies of the executive branch through an apportionment system. The Director of OMB apportions (distributes) appropriations and other budgetary resources to each agency by time periods (usually quarters) or by activities. Obligations may not be incurred in excess of the amount apportioned. The objective of the apportionment system is to ensure the effective and orderly use of available authority and to reduce the need for requesting additional or supplemental authority.
Changes in laws or other factors may indicate the need for more authority during the year, and supplemental requests may have to
be transmitted to the Congress. On the other hand, reserves may be established under the Antideficiency Act (31 U.S.C. 665) to provide for contingencies or to effect savings made possible by or through changes in requirements or greater efficiency of operations. Amounts may also be withheld for policy or other reasons pursuant to the Impoundment Control Act. Whenever the President determines that all or part of any budget authority provided by the Congress will not be required to carry out the full objectives or scope of a program for which it was provided, or that such budget authority should be rescinded for fiscal policy or other reasons, a special message is transmitted by the President to the Congress requesting a rescission of the budget authority. The budget authority proposed by the President for rescission must be made available for obligation unless both the House and the Senate pass a rescission bill within 45 days of continuous session after receiving the President's message. Whenever all or part of any budget authority provided by the Congress is deferred (that is, temporarily withheld from obligation), the President transmits a special message to the Congress on such deferrals. Either House may, at any time, pass a resolution disapproving this deferral of budget authority, thus requiring that the funds be made available for obligation. When no congressional action is taken, deferrals may remain in effect until, but not beyond, the end of the fiscal year. If the funds remain available beyond the end of a fiscal year and continued deferral of their use is desired by the President, he must transmit a new special message to the Congress.
Review and audit.—This is the final step in the budget process. The individual agencies are responsible for assuring—through their own review and control systems—that the obligations they incur and the resulting outlays follow the provisions of the authorizing and appropriating legislation, as well as other laws and regulations relating to the obligation and expenditure of funds. OMB reviews program and financial reports and keeps abreast of agency programs and the effort to attain program objectives.
In addition, the General Accounting Office (GAO), as an agent of the Congress, regularly audits, examines, and evaluates Government programs. Its findings and recommendations for corrective action are made to the Congress, to OMB, and to the agencies concerned. The GAO also monitors the executive branch's reporting of special messages on proposed rescissions and deferrals. The GAO reports any items not reported by the executive branch and any differences that it may have with the classification (as a rescission or deferral) of withholdings included in special messages submitted by the President. The GAO
may bring civil actions to obtain compliance should the President fail to make budget authority available in accordance with the Impoundment Control Act.
COVERAGE OF THE BUDGET TOTALS
Agencies and programs. The budget totals cover agencies and programs (including Government corporations) owned by the Federal Government, no matter how funded, except for the following offbudget Federal entities:
Exchange stabilization fund,"
Federal Financing Bank. The totals also exclude privately owned, Government-sponsored enterprises, such as the Federal land banks and Federal home loan banks. The off-budget Federal entities listed above are discussed in Part 6 of the Budget, and financial statements are presented in Part IV of the Budget Appendix. These data are also presented in selected tables throughout the budget documents. Privately owned Government-sponsored enterprises are discussed in Part 6 of the Budget, and financial statements are presented in Part VI of the Budget Appendix.
Functional classification.—The functional classification arrays budgetary data according to the major purpose served by the unit being classified. In accordance with the Congressional Budget Act, the Congress must pass resolutions establishing budget targets and ceilings by functional categories.
The following criteria are used in establishing and in assigning activities to functional categories: • A function must have a common end or ultimate purpose ad
dressed to an important national need. (The emphasis is on what the Federal Government seeks to accomplish rather than the means of accomplishment, what is purchased, or the clientele or geographic area served.)
1 The administration has proposed legislation to include the administrative expenses of the Exchange stabilization fund (ESF) in the budget. See Part 6 for additional information.
2 Investments in Con Rail securities, which comprise almost all of the Association's activity after 1977, are included in the budget. : A discussion of this subject is also found in Part 5 of this volume.
• A function must be of continuing national importance and be significant in size, that is, normally account for at least 2% of
total budget outlays over a number of years.
• Each basic unit of classification (generally the appropriation or fund account) is classified into the single best or predominant purpose and assigned to only one function. However, when an account serves more than one major purpose, it may be subdivided into two or more subfunctions.
• Activities and programs are normally classified by common purpose (or function) regardless of which agencies conduct the activities.
National needs presentation.—Section 601 of the Congressional Budget Act of 1974 (Public Law 93–344) requires that the budget for each fiscal year beginning with the fiscal year ending September 30, 1979: shall contain a presentation of budget authority, proposed budget authority, outlays, proposed outlays, and descriptive information in terms of L (1) a detailed structure of national needs which shall be used to reference all agency missions and programs; (2) agency missions; and (3) basic programs. While national needs and agency missions have not been specified, as such, in previous budgets, the thrust of the budget functional classification has always been to summarize what the Government is doing, or expects to do, in terms of the ultimate purpose that the Government programs are designed to serve. Building upon this basic approach, the budget functional classification was refined in preparation for the 1979 budget to provide a sharper focus on end purposes and accomplishments. In addition, each major function is described in the context of national needs being served and subfunctions are described in the context of major missions devoted to serving national needs. This is in keeping with the act, which states: To the extent practicable, each agency shall furnish information in support of its budget requests in accordance with its assigned missions in terms of Federal functions and subfunctions, including mission responsibilities of component organizations, and shall relate its programs to agency missions. In addition, the conference report stated: The conference substitute provides for the inclusion in the President's budget of a presentation in terms of national needs, agency missions, and basic programs. The managers anticipate that this need not be a separate classification but can be incor