Podcast: What the New Fiscal Year Means for Federal Programs

September 28, 2010

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In this podcast, we’ll discuss how federal programs are affected by the start of the new fiscal year. I’m Michelle Bazie and I’m joined by Jim Horney, the Center’s Director of Federal Fiscal Policy.

1. Jim, as the start of the fiscal year approaches, can you tell me what that means for federal programs?

 Well, first of all, for a number of federal programs, so-called “entitlement programs” like Medicare and Medicaid it doesn’t really have any big effect, because those programs are permanently funded, the end of a fiscal year and the beginning of a new one doesn’t really change how they operate. 
 

2. What about the other programs?

For the other programs, so-called discretionary programs, which are funded through annual appropriation bills generally just for one year at a time, it makes a big difference, because the appropriations they have for this year will run out, and what’s key is whether appropriation bills providing appropriations for the new fiscal year have been provided, and at what level. 

3. So the new fiscal year begins on October 1st, if I’m correct?

That’s right.

 4. Ok, do the President and Congress usually get the budget in place by October 1?

Unfortunately, they don’t always do that. In fact, in recent years, it’s pretty unusual for all of the appropriation bills to be enacted before the start of the fiscal year.

5. What are the consequences of letting those bills slip?

Well, if no appropriations are provided at all, it really means that a number of programs would have to shut down. You close down national parks, there are a lot of activities that simply won’t happen. Now, let’s be clear that certain emergency or very important activities like Federal Aviation Administration air traffic controllers -- they don’t go home at the stroke of midnight if an appropriation hadn’t been provided. But for many federal programs, if nothing has been done, federal employees can’t come to work, they can’t do their jobs.

6. Do you expect a government shut down this year?

 No, I don’t think that’s going to happen at all. What usually happens is, in, say the normal circumstance where not all of the appropriation bills have been done, Congress and the President will enact a so-called Continuing Resolution that says the agencies which have not received a new appropriation for the new fiscal year can continue to operate at their current levels for a certain length of time, or until the new appropriations have been enacted.

7. So, you don’t expect a shutdown. What do you expect?

It looks virtually certain that none of the regular appropriation bills for Fiscal Year 2011, the one that starts Friday, will be enacted. But I fully expect that the Congress, between now and then, will pass a Continuing Resolution that will keep all the agencies operating until sometime late in November, early December. And when the Congress comes back in mid-November they will start trying to figure out what to do about the regular appropriation bills.

8. What happens if they can’t pass those appropriations bills in the session after the election?

Well, if they can’t pass it during the so-called “lame-duck” session, then I would expect they would pass another Continuing Resolution that would keep agencies funded over until next, probably February, and then when the new Congress takes its place in January, they will begin considering the appropriation bills for Fiscal Year 2011, which at that point will already be more than three months old.

9. Does it matter if the Continuing Resolution goes until next year?

Continuing Resolutions are not the ideal way for agencies to operate, particularly for any length of time. Because when they’re operating on a Continuing Resolution, they don’t know how much money they’re going to have for the full year, so there’s a lot of uncertainty. And for a number of agencies where circumstances have changed and they need more funding for certain programs, they’re hamstrung. They can’t start providing that new level of funding. So, it’s not good. For a few weeks, a month, it’s really not a problem for most agencies, but the longer it goes on, the more difficult it is for agencies to do their work appropriately.

10. Why can’t the President and Congress get these appropriations bills done on time?

The problem is it’s difficult. We’re in a situation now where there’s very little consensus about anything on the budget, including agreement about what the overall level of discretionary appropriations should be, how much should be available for various programs. And so these disagreements make it hard to get things through, particularly when it’s very difficult to get anything through the Senate, when essentially you need 60 out of 100 votes to pass a bill. So, if there’s political disagreement it becomes very hard to get these things done.

Thanks for joining me, Jim.

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