Follow the Federal Dollars

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Follow the Federal Dollars

• An Introduction to the Federal Budget Process
• September 7, 2006
• Duluth, Minnesota
• Steve Francisco, Federal Policy Director
• Minnesota Budget Project
• Minnesota Council of Nonprofits

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Why Care About the Federal Budget?

• Your organization receives Federal funds for
  programs or services
• The people you serve depend upon Federal programs
  or services, such as Social Security, Medicare,
  Medicaid (Medical Assistance), Supplemental
  Security Income (SSI), Food Stamps, Women,
  Infants Children (WIC) nutrition program,
  veterans benefits, housing, education, Earned
  Income Tax Credit (EITC)
• Decisions about the Federal Budget directly
  affect state and local government spending on
  programs and services for people you serve
• The Budget expresses national political, social,
  and economic priorities

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Basics About the Federal Budget

• Revenues (Income)
• Outlays (Expenditures)
• Accounts and Funds
• Deficit
• Surplus
• Mandatory vs. Discretionary spending

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Revenues by Source2.4 trillion in 2005
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Outlays
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Two Basic Types of Funds

• Federal Funds are spent on general activities of
  the government
• Trust Funds are used exclusively to fund specific
  programs, such as Social Security, Medicare,
  Highway and Transportation, Aviation
• Examples Revenue from individual income taxes
  goes to the general fund in the Treasury.
  Outlays for general activities, such as public
  health programs in HHS, are appropriated from
  Federal Funds
• Revenue from the Social Security payroll tax goes
  into the Social Security Trust Fund. Outlays for
  Social Security benefits are paid from the Social
  Security Trust Fund

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Accounts and Funds

• Revenues (income) and Outlays (spending) are
  recorded through accounts. Funds allocated to
  accounts are further divided by programs and
  activities.
• Unlike most states, Federal government does not
  have separate operating and capital budgets.
  These functions are merged together in the
  unified budget.

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Deficit and Surplus

• Where outlays or expenditures exceed revenues or
  income, a deficit exists
• Where revenues exceed outlays or expenditures, a
  surplus exists.
• A deficit refers to the relationship between
  revenues and outlays in a particular year
• The national debt is the cumulative total of
  deficits over a period of years

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Mandatory vs. Discretionary Spending

• Mandatory (Direct) Spending usually provided in
  permanent law for entitlement programs, such as
  Social Security, Medicare, and Food Stamps
• Most mandatory spending comes from trust funds
  through permanent appropriations. The key House
  and Senate committees with jurisdiction over most
  mandatory spending are House Ways and Means and
  Senate Finance Committees.

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Mandatory vs. Discretionary Spending

• Example of Mandatory Spending Social Security
  and Medicare are established in permanent law
  which sets eligibility and benefits. Benefits
  are paid from a trust fund. Any proposals to
  change the Social Security and Medicare programs
  would be considered in the House Ways Means
  Committee and Senate Finance Committee

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Mandatory vs. Discretionary Spending

• Example of Discretionary Spending Federal aid
  to education is set in annual authorization and
  appropriations bills. The authorizing committees
  define policies and purposes. The appropriations
  committees determine how much money will actually
  be spent to accomplish the policies and purposes.
  Appropriations are made on an annual basis.

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The Federal Fiscal Year

• 12 months long
• Begins each year on October 1 and end the next
  year on September 30.
• The Fiscal Year is named for the year in which it
  ends. Thus, Fiscal Year 2006 begins on October
  1, 2005 and ends on September 30, 2006.

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The Federal Fiscal Year

• The Federal Budget is based upon a multi-year
  framework.
• Current Year the year in progress
• Budget Year the upcoming Fiscal Year
• Outyears the Fiscal Years after the Budget Year

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The Federal Budget Timeline

• Spring to Fall Agency requests submitted to
  Office of Management and Budget (OMB) for review,
  revision, inclusion, or exclusion in Presidents
  Budget
• Late January / Early February Presidents
  Budget submitted to Congress
• February to April House and Senate Budget
  Committees hold hearings to review Presidents
  Budget and begin developing separate House and
  Senate Budget Resolutions

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The Federal Budget Timelines

• Spring -- House and Senate consider separate
  Budget Resolutions. Conferees appointed to
  resolve differences between House and Senate
  Resolutions.
• April 15 Final adoption of joint House-Senate
  Budget Resolution (the Budget Conference Report).
  Optional Reconciliation process begins with
  directives to committees about revenue (tax) and
  appropriations (spending) issues
• July 15 Presidents Mid-Session Review
  submitted to Congress
• April to September House and Senate authorizing
  and appropriations committees consider
  discretionary spending bills and conference
  reports
• September Deadline for committees to act on
  Reconciliation measures
• October 1 Beginning of the new Fiscal Year

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What is the Budget Baseline?

• The projection of revenue (income), outlays
  (spending), and deficit or surplus into future
  years based upon the status quo (i.e., assuming
  no changes in tax or spending policies from
  current law)

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The Budget Baseline

• Technical assumptions changes in demographics,
  program workloads
• Economic assumptions changes in the growth of
  the economy, inflation rates, unemployment
• The President and Congress each develop their own
  budget baselines. The Office of Management and
  Budget (OMB) develops the Presidents baseline.
  The Congressional Budget Office (CBO) develops
  Congress baseline

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The President and the Budget

• Agencies and Office of Management and Budget
  (OMB) begin developing proposals approximately 9
  months before Presidents Budget is submitted to
  Congress and 17 months before start of new fiscal
  year
• OMB is watchdog over agencies to ensure they
  are carrying out administrations policies

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The President and the Budget

• The President submits Budget to Congress
• The President proposes Congress disposes
• July 15 Mid-Session Review

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The President and the Budget

• Advocacy Opportunities
• Connect with other allies from state and national
  organizations to create coalition
• Send letters, email, faxes, petitions to
  departments or agencies expressing views on
  Presidents Budget
• Send letters, email, faxes, petitions to OMB
  expressing views on Presidents Budget

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The President and the Budget

• Advocacy Opportunities (Continued)
• Send letters, email, faxes, petitions to the
  President about the Budget
• Respond to Notice of Public Comment in the
  Federal Register on proposed new rules affecting
  Federal programs
• Indirect advocacy through letters to the editor,
  editorials, internet websites and blogs,
  advertisements, community cable access

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Congress and the Budget

• Congress receives Presidents Budget in late
  January / early February
• House and Senate Budget Committees begin
  reviewing Presidents Budget in public hearings
• House and Senate Budget Committees develop
  separate Budget resolutions

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Congress and the Budget

• House and Senate consider separate Budget
  resolutions
• House and Senate appoint Conference Committee to
  resolve differences
• House and Senate consider Budget Conference Report

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Congress and the Budget

• House Budget Committee
• Rep. Jim Nussle, R-IA, Chair
• Rep. John Spratt, D-SC, Ranking Member
• 39 members (22 Republicans, 17 Democrats)
• No Minnesota members on Committee
• www.house.gov/budget

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Congress and the Budget

• Senate Budget Committee
• Senator Judd Gregg, R-NH, Chair
• Senator Kent Conrad, D-ND, Ranking Member
• 20 members (12 Republicans, 8 Democrats)
• No Minnesota senators on Committee
• www.senate.gov/budget/republican
• www.senate.gov/democratic

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Congress and the Budget

• Advocacy Opportunities
• Submit testimony to House and Senate Budget
  Committees
• Individual or coalition letters to Budget
  Committees
• Lobbying visits to members of Budget Committees
• Meet with local Congressional delegation / staff
• Attend Congressional Town Hall meetings in
  state or district and speak out on impact of
  Budget proposals

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Congress and the Budget

• The Budget does not set exactly how much money
  will be spent for any particular program or
  activity. The Budget sets a framework for tax
  and spending decisions made by Congressional
  committees in separate authorization and
  appropriations legislation

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Congress and the Budget

• Authorizing committees make decisions about
  specific programs. For example, the House
  Agriculture Committee decides whether to make
  changes to the Food Stamp Program, such as
  eligibility criteria and benefits
• Appropriations committees make decisions about
  how much money will be spent

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Congress and the Budget

• Advocacy Opportunities (continued)
• Ask your senator or representative to do Special
  Order or Extension of Remarks on budget impact
  for your issue, program, service
• Letters to the editor, editorials, opinion pieces
  in newspapers, magazines
• Websites, blogs, advertisements, community cable
  access
• Press conference
• Visibility event at a Congressional office

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Congress and the Budget

• How is the Budget Resolution Enforced?
• 302(a) spending allocations to Appropriations
  Committees
• 302(b) spending allocations to Appropriations
  Subcommittees
• Scorekeeping
• Points of Order

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Congress and the Budget

• The Role of Committees in Congress
• Dividing up the work load
• Jurisdiction
• Revenue (tax) decisions made by House Ways and
  Means Committee and Senate Finance Committee
• Social Security Medicare

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Congress and the Budget

• House Ways Means Committee
• Rep. Bill Thomas, R-CA, Chair
• Rep. Charles Rangel, D-NY, Ranking Member
• 41 members (24 Republicans, 17 Democrats)
• Rep. Jim Ramstad, R-MN, on Committee
• www.waysandmeans.house.gov

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Congress and the Budget

• Senate Finance Committee
• Sen. Charles Grassley, R-IA, Chair
• Sen. Max Baucus, D-MT, Ranking Member
• 20 members (11 Republicans, 9 Democrats)
• No Minnesota senator on Committee
• www.finance.senate.gov

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Congress and the Budget

• House Appropriations Committee
• Rep. Jerry Lewis, R-CA, Chair
• Rep. David Obey, D-WI, Ranking Member
• 66 members (37 Republicans, 29 Democrats)
• Rep. Martin Sabo, D-MN, on Committee
• Appropriations.house.gov

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Congress and the Budget

• 10 House Appropriations Subcommittees
• Agriculture, Rural Development, Food and Drug
  Administration, and Related Agencies
• Energy and Water Development and Related Agencies
• Foreign Operations, Export Financing, and Related
  Agencies
• Homeland Security
• Interior, Environment, and Related Agencies
• Labor, Health and Human Services, Education, and
  Related Agencies
• Military Quality of Life, Veterans Affairs, and
  Related Agencies
• Science, Departments of State, Justice, Commerce,
  and Related Agencies
• Transportation, Treasury, Housing and Urban
  Development, Judiciary and the District of
  Columbia

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Congress and the Budget

• An appropriation act provides the legal basis for
  the government to spend money for a designated
  purpose.
• 3 Main Types of Appropriations
• Regular appropriations provide spending authority
  for the next Fiscal Year
• Supplemental appropriations provide additional
  spending authority in the current Fiscal Year
• Continuing appropriations (or Continuing
  Resolutions) provide stop gap or full-year
  funding for agencies that have not yet received a
  regular appropriation by the start of the Fiscal
  Year

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The Budget Reconciliation Process

• Optional Used by Congress to bring revenue
  (tax) and spending (appropriations) law into
  conformity with policies in the Budget
  Resolution.
• Two stages
• 1.) reconciliation directives in Budget
  Resolution, and
• 2.) reconciliation legislation implementing
  changes in revenues or spending
• Omnibus bills include many provisions on
  unrelated issues

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The Budget Reconciliation Process

• Whats in a reconciliation directive?
• The name of the committee or committees that are
  directed to report legislation
• The specific amounts by which existing revenue or
  appropriations are to be changed based on CBO
  baseline without specific instructions on how
  to do so.
• A deadline date for action by the committees

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What Happens If Congress Doesnt Pass a Budget
Resolution?

• A Continuing Resolution extends current law in
  status quo (no changes to program spending) for
  agencies or programs that do not have new
  authorizations or appropriations.

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What Happens When the President Doesnt Want to
Spend Money Appropriated by Congress?

• Impoundment An action by the President or an
  agency that delays or withholds the expenditure
  of appropriated funds
• Deferral delays the use of appropriated funds
• Rescission requests Congress to rescind or cancel
  an appropriation

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Where can I go to track Federal budget issues?

• U.S. House of Representatives www.house.gov/
• U.S. Senate www.senate.gov/
• Websites for Members of Congress
• The White House www.whitehouse.gov/
• Office of Management and Budget (OMB)
  www.whitehouse.gov/omb/
• Congressional Budget Office (CBO) www.cbo.gov/
• THOMAS The Library of Congress legislative
  information service (text of bills, public laws,
  status of legislation) www.thomas.loc.gov
• Center on Budget Policy and Priorities (CBPP)
  www.cbpp.org
• OMB Watch www.ombwatch.org
• Minnesota Budget Project www.mncn.org/bp/federali
  ssues.htm
• The Washington Post www.washingtonpost.com
• Congressional Quarterly www.cq.com
• Roll Call www.rollcall.com