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1 1 (May 13, 2022)

handle is hein.crs/goveftd0001 and id is 1 raw text is: I nr in th legi t atiy Introduction to Budget Authority May 13, 2022 Under the U.S. Constitution, Congress exercises the power of the purse. This power is expressed through the application of several provisions, particularly Article I, Section 9, which states that funds may be drawn from the Treasury only pursuant to appropriations made by law. However, when Congress enacts an appropriation, this does not mean that the Treasury sets aside cash for a specified agency to allow it to carry out that purpose. In practice, it means that when Congress enacts an appropriation it is providing an agency with budget authority that can be used to finance federal programs and activities. This budget authority allows agencies to enter into various financial obligations and for the Treasury to subsequently outlay the funds to meet those obligations. Agencies can enter into financial obligations through such things as employing personnel, entering into contracts, submitting purchase orders, or other activities that establish a financial liability. Because it takes time for budget authority to become outlays, the amount of budget authority enacted for a fiscal year does not necessarily equal the amount of outlays that will occur in that year. The outlay amounts for proposed budget authority are estimates based on the historical rate at which funds for a given account or activity have been expended (known as the outlay rate or spendout rate). As illustrated in the figure below, the enactment of budget authority, its obligation, and the outlay of funds by the Treasury occur at separate stages of the spending process. A portion of the budget authority enacted in a fiscal year may be obligated but not become outlays until future years, or it may remain unobligated until future years. Conversely, some of the budget authority enacted in previous years may become outlays in the current year. Budget Authority -* Obligations * Outlays Section 3(2) of the Congressional Budget Act (2 U.S.C. §622(2)) defines budget authority to mean: (i) provisions of law that make funds available for obligation and expenditure (other than borrowing authority), including the authority to obligate and expend the proceeds of offsetting receipts and collections; (ii) borrowing authority, which means authority granted to a Federal entity to borrow and obligate and expend the borrowed funds, including through the issuance of promissory notes or other monetary credits; (iii) contract authority, which means the making of funds available for obligation but not for expenditure; and (iv) offsetting receipts and collections as negative budget authority, and the reduction thereof as positive budget authority. Budget Authority In most cases, budget authority is provided in the form of appropriations making funds available for both obligation and expenditure. The statutory language that provides budget authority can be classified in various ways that indicate how it is provided, how long it will be available, and how much will be available. Discretionary vs. Direct Spending Discretionary spending is provided and controlled by appropriations acts. Direct spending (also referred to as mandatory spending) is provided and controlled by other laws. These classifications are defined in statute (2 U.S.C. §900(c)(7)-(8)) for purposes of procedural and statutory budget enforcement rules. Classified by Duration Budget authority may be made available for obligation for a one-year, multiyear, or no-year period. One-year, or annual, budget authority is available for obligation only during a specific fiscal year, and any unobligated authority expires at the end of that fiscal year. Multiyear authority is available for a period longer than one fiscal year (but still a defined period). No-year budget authority is available for an indefinite period. No-year budget authority is typically identified by language indicating that it is to remain available until expended. Classified by Amount Budget authority may establish a definite amount that is available for obligation. In some instances, however, a statute may instead provide an indefinite amount of budget authority. For example, Congress may appropriate all or part of the receipts from certain sources, even though the specific amount that will be collected cannot be determined. Congress may also appropriate such sums as may be necessary for a given purpose. Classified by Permanency Some budget authority is provided on a temporary basis, such as in annual appropriations or through periodic reauthorizations (such as the farm bill), while other budget authority is provided on a permanent basis (such as for https://crsreports.congress.gov

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