Many Members view the major benefit of biennial budgeting as freeing up more time for oversight, program evaluation, and other essentially nonbudgetary activities. They are concerned that the annual legislative agenda is so crowded with budgetary matters that insufficient time remains for those other legislative functions. Further, they question whether major budgetary measures such as appropriation and reconciliation acts, that are generally considered under restrictive budget rules, are the most effective way to consider major policy initiatives or other nonbudgetary matters.
My statement will make the following points about biennial budgeting and S. 261:
Under S. 261, the Congress and the President would act on budgetary matters every other year. The first session of each Congress would be devoted to budgetary actions--the President's budget, the budget resolution, and appropriation and reconciliation acts--under a schedule that parallels the current annual timetable. The second session would generally be reserved for nonbudgetary activities--planning, oversight, and authorizing legislation--and for any needed adjustments in budget laws enacted in the first session or in earlier years. S. 261 bars the Congress from considering any authorizing legislation or nonreconciliation (free-standing) revenue measures during the first session until it has finished acting on the budget resolution, all biennial appropriation acts, and any reconciliation legislation. It also prohibits the Congress from considering authorization or nonreconciliation revenue measures that cover less than two years.
A biennium composed of two separate fiscal years would become the standard fiscal period. The fiscal biennium would begin on October 1 of each odd-numbered year, and end on September 30 two years later. Budgets would cover two-year periods. The President's budget and the Congressional budget resolution would cover three successive bienniums (a six-year period), and regular appropriation acts would be required to provide funds for a full biennium. To enforce the requirement for biennial appropriations, S. 261 would bar the House and Senate from considering a regular appropriation bill that does not provide funds for both years of the biennium. If, despite that prohibition, any regular appropriation measure is enacted that provides funds only for the first fiscal year of a biennium, S. 261 would automatically appropriate an amount for the second year equal to the first year's appropriation.
S. 261 also would conform the Government Performance and Results Act
of 1993 (GPRA) to the two-year budget cycle. In general, GPRA requires
federal agencies to prepare strategic plans and performance reports on
their functions and activities, and requires agencies to submit strategic
plans with their budget year submissions beginning with fiscal year 1999.
S. 261 would require authorizing committees to review agency plans and
to include their review in the views and estimates that they submit to
the Budget Committees.
BIENNIAL BUDGETING WOULD HAVE MORE EFFECT ON THE TIMING OF BUDGETARY
ACTION THAN ON ITS DURATION
In evaluating S. 261 and biennial budgeting in general, the Committee should distinguish questions about the appropriate duration of the budget from questions about the appropriate timing of budgetary action.
As to the duration or period of time for which budgetary decisions typically are made, a biennial budget would not depart significantly from existing practice. Most budgetary recommendations and laws now cover a multiyear period. The President prepares multiyear revenue and spending estimates in his annual budget. The most recent Congressional budget resolution includes recommended levels for fiscal years through 2002. Further, most revenue and spending law is permanent. Nearly all revenues are derived from permanent laws. About two-thirds of all spending, principally entitlements and net interest, also flows from permanent law. Of the remaining third--so-called discretionary spending--substantial amounts are made available for more than one year, particularly in defense activities (although multiyear appropriations for discretionary accounts typically are considered each year).
In contrast, biennial budgeting would represent a major change in practice
as to the timing of budgetary action. Although the President and the Congress
make most budgetary decisions for multiyear periods, they act on the budget
annually. Thus, biennial budgeting would have its greatest effect on the
annual appropriation process, in which policymakers both act on and provide
funds one year at a time.
GAINS FROM BIENNIAL BUDGETING WOULD BE OFFSET BY CERTAIN DRAWBACKS
The overall goals of a biennial budget process are to ease the pressure of the annual budget cycle and promote better planning and oversight. However, acting on the budget every other year would involve certain trade-offs. In general, policymakers should weigh the potential gains from more time for planning, program evaluation, and oversight against a potential loss of budgetary control and accountability.
A biennial budget process might yield fewer tangible benefits for the Congressional workload and oversight agenda than one might expect. For example, the process of reestimating and revising the two-year budget, given the major budgetary issues that could be raised, might easily come to dominate the non-budgetary session. If the economic and technical assumptions underlying the two-year budget were not revised before the end of the biennium, then the budgetary information and estimates needed by policymakers would become unreliable. Consequently, budget enforcement procedures and cost estimates of pending legislation would be distorted.
Considering budgetary matters only every other year could also lead to missed opportunities or the need for ad hoc budgetary action. For example, if disagreement over budget policies produced a stalemate beyond the first year of a new biennium, the Congress and the President would have no mechanisms for carrying on the budget debate the following year. Policymakers, knowing that they are acting under a two-year cycle that called for budget action in the first session only, might possibly be more inclined to resolve budgetary conflicts before that session ended. However, if policymakers did not resolve those conflicts by the end of the budget session, they would have to postpone the budget debate until the next Congress or pursue it in an ad hoc manner.
Although biennial appropriations may have payoffs in improved planning for federal agencies and more time for Congressional oversight, they also might diminish Congressional control of spending and necessitate large supplemental appropriations or other adjustments in the off year. Further, Congressional oversight that is divorced from the purse strings may be less effective than oversight conducted through annual appropriations hearings linked to agency funding requests. Moreover, the potential for increasing the time available for oversight and other activities rests on the assumption that public policy issues can be neatly divided into budgetary and nonbudgetary questions, and that budgetary matters can be confined to a single session of the Congress.
Certain appropriated programs with stable or predictable funding patterns
may be good candidates for two-year appropriations. However, multiyear
appropriations can be accommodated now within the annual appropriation
process. For example, multiyear funding has been used for certain defense
procurement programs to allow better planning and to achieve management
savings.
ENFORCEMENT PROCEDURES UNDER S. 261 WOULD MAKE THE BUDGET AND
LEGISLATIVE PROCESS MORE RIGID
S. 261 includes procedures to ensure that the Congress principally acts on budgetary measures in the first session and nonbudgetary matters in the second session. However, those procedures would also create certain difficulties that make the legislative and budget process more rigid.
For example, the bill would prohibit the Congress from considering any authorization or nonreconciliation revenue measure during the first session until action on all budgetary legislation--including the budget resolution, appropriations, and reconciliation--has been completed. Because major budget legislation rarely is completed before the end of a Congressional session, this requirement generally would postpone action on authorization and certain revenue measures until the second session.
However, some authorization and free-standing revenue measures have significant budgetary effects that the Congress might wish to consider during its budgetary session. For example, some authorization measures include significant mandatory spending provisions, and both major and minor tax legislation is sometimes considered outside of the reconciliation process. A basic tenet underlying current Congressional budget procedures is that any spending or revenue measure that is consistent with the budget resolution may be considered by the Congress once that resolution has been adopted.
Under S. 261, the Congress might have to wait until the second session
to consider certain types of measures that may have a significant budgetary
effect but are not considered to be budgetary measures suitable for action
during the first session. Alternatively, the Congress might be faced with
the choice of packaging such measures together with other budgetary legislation,
to which they may or may not be related, or simply waiving the requirement
altogether.
BIENNIAL BUDGETING IS UNLIKELY TO HAVE A MAJOR EFFECT ON CBO
S. 261, or other proposals for converting to a two-year budget cycle, are unlikely to have a major effect on CBO's duties, responsibilities, or workload. Under S. 261, CBO would continue to be required to prepare its annual report on the economic and budget outlook early each year, and would continue to submit its annual update report each August. Also, CBO would still have to prepare cost estimates on authorization and revenue measures reported during the second session, and on any other legislation of a public character (whether or not there is a budgetary impact) that is reported by a committee. Moreover, a biennial budget cycle would not affect CBO's responsibilities under the Unfunded Mandates Reform Act.
In addition, CBO also would continue to update its budget and economic
projections to assist the Congress in revising its two-year budget resolution
and evaluating the President's supplemental budget estimates and requests.
As noted above, the process of revising and reevaluating the two-year budget
could resemble annual budgeting. Further, CBO would provide scorekeeping
information on supplemental appropriations measures and other changes in
appropriation law during the second session.
CONCLUSION
Proponents of biennial budgeting increasingly are concerned that in
recent years policymakers and public officials have become overwhelmed
by the requirements of the annual budget process. They assert that the
seemingly incessant demands of the annual budget cycle detract from the
other functions of government, such as long-range planning and oversight,
that are equally if not more important. However, whether budgeting every
other year would ease the legislative pressures facing policymakers remains
unclear. Moreover, converting to a biennial budget cycle would have drawbacks
for the budget process related to a loss of budgetary control and accountability,
and might actually weaken oversight.