The executive budget process consists of three main phases:
- Development of the President’s budget proposal;
- Submission and Justification of the President’s budget proposal; and
- Execution of enacted appropriations and other budgetary legislation.
Development
The Budget and Accounting Act of 1921 established the modern executive budget process. It created a legal framework for a federal budget proposal to be developed by the President and
submitted to Congress prior to the start of each fiscal year.
In practice, development of the President’s budget proposal begins approximately 18 months prior to the start of the fiscal year to which it applies. (For example, development of the President’s FY 2020 Budget begins in the Spring of 2018.)
Executive agencies submit their requests and justification materials to the Office of Management and Budget (OMB) for examination and review. After final decisions have been made by the President, the budget proposal is finalized by OMB.
Submission and Justification
Under current law, the President must submit the budget proposal to Congress no later than the first Monday in February.
Once the President has submitted the budget, OMB and agency officials explain and justify the request to Congress. Early in the congressional budget process, often in the week following the submission of the President’s budget, the OMB director and other cabinet officials typically provide testimony regarding the President’s broad budgetary objectives before congressional committees. In addition, agencies typically submit written justifications of their budget requests to Congress and agency officials often will testify before the committees of jurisdiction.
The President’s budget, though not legally binding, provides Congress with recommended spending levels for programs, projects, and activities that are funded through appropriations and other budgetary legislation.
Budget Execution
Funds provided in appropriations and other budgetary legislation are not immediately available for obligation or expenditure. The Antideficiency Act requires that funds be apportioned (or divided), often by fiscal quarter, prior to obligation or expenditure. Agencies then allocate those funds to programs, projects, and activities.
Congress has recognized the need to permit agencies some flexibility during budget execution, and it has provided agencies with limited authority to make spending adjustments. For example, Congress may provide agencies with limited authority to reallocate funds from one appropriations account to another (i.e., transfers), or from one purpose to another within an appropriations account (i.e., reprogramming).
Under the Impoundment Control Act (ICA) of 1974, the President may withhold appropriated funds temporarily (referred to as deferrals) or propose to Congress permanent cancellations of budget authority (referred to as rescissions).