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Four Reasons Not to Move to Biennial Budgeting

The Senate recently expressed support for “biennial budgeting,” under which policymakers would consider budgets and appropriations bills that stretch over two years rather than one.  We urge those who voted for this concept, in the form of an amendment to the Senate budget resolution, to reconsider.

While proponents of biennial budgeting say it will improve budgeting and congressional oversight, it’s unlikely to work in the real world as they suggest and, as many budget experts have concluded, its disadvantages outweigh the advantages.

Here are four reasons why:

Biennial budgeting is done too far in advance. Agencies would begin to craft their budgets for the second year of a two-year cycle at least 28 months before that year starts and 40 months before it ends.  They cannot possibly know that far in advance what the particular needs of individual programs will be or the special factors that might influence those needs.  Both the economy and social conditions can change substantially from year to year.  Consequently, between budget cycles, agencies would inevitably want to make changes to programs.  But, under biennial budgeting, it may be a year before policymakers can fully reflect those needed changes in their budget decisions.

Budgets would have to be revised frequently. Pressures to revise the budget during the two-year period would be very strong, likely generating frequent budget revisions and large supplemental appropriation bills.  Such revisions often involve less rigorous congressional analysis than the regular budget process. The possible result:  nearly as much budgeting activity as under the current annual budget process, but with much of it pursued on an ad hoc basis.

Biennial budgeting may protect the status quo. Reordering budget priorities often involves challenging the status quo and confronting strong constituencies that protect various discretionary programs.  Due to resistance to such shifts, changes tend to occur incrementally; each year, policymakers can nudge down appropriation levels for lower-priority programs somewhat and boost funds for important new initiatives somewhat.  If, however, policymakers make appropriations decisions only once every two years, the process of reordering budget priorities may proceed more slowly.  Lower-priority programs will likely be reduced at slower rates because Congress tends not to take big bites out of existing programs all at once.  Thus, while biennial budgeting would represent a change in the budget process, it could impede changes in budget priorities.

States have seen the downsides of biennial budgeting and are moving away from it. Most states, including nearly all of the largest states, use annual rather than biennial budgeting, according to the National Conference of State Legislatures.  Since 1968, some 18 states have changed their budget cycles; 15 from biennial to annual and only 3 from annual to biennial.