TESTIMONY OF
FRANKLIN D. RAINES
DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
on
S. 261, the "Biennial Budgeting and
Appropriations Act"
April 23, 1997
Mr. Chairman, and Members of the Committee, I am pleased to be here
this morning to discuss S.
261, the "Biennial Budgeting and Appropriations Act" introduced by
Senators Domenici, Ford,
and Thomas.
This Administration has strongly supported numerous initiatives to
improve the efficiency and
effectiveness of the Federal government. Beginning with the Vice
President's National
Performance Review in 1993, the Administration has sought to reinvent
our government, so that
it will work better and cost less.
We have already seen numerous successes. Since President Clinton
took office in January 1993,
the number of Federal, executive branch civilian employees has already
dropped by nearly
300,000 -- the lowest level in more than 30 years. And we have made
substantial progress
towards putting our financial house in order, with a 63 percent
reduction in actual Federal deficits
since the President took office in 1993, and a 90 percent reduction in
projected deficits through
2002. I hope that in the coming weeks, the Administration can reach a
bipartisan agreement with
the Congress to put policies in place this year which will
enable us to reach a balanced budget in
2002.
Biennial budgeting offers the potential to contribute to the enhanced performance of our government. This Administration has on several occasions expressed interest in the potential advantages of biennial budgeting. In 1993, Vice President Gore's Report of the National Performance Review" proposed moving to biennial budgeting; the following month, in testimony before the House Committee on Government Operations, President Clinton's first OMB Director -- and former House Budget Committee Chairman -- Leon Panetta expressed support for biennial budgeting; and the President's FY 1995 budget also discussed the potential benefits of budgeting for two years.
I'd like to begin our discussion of S. 261, by taking a few minutes
to summarize the
Administration's understanding of how the budget process would operate
under this legislation,
followed by some observations about the potential benefits, as well as
complexities, of biennial
budgeting.
Summary of Legislation
S. 261 would apply a biennial cycle to the President's budget, the
congressional budget resolution,
the 13 regular appropriations bills, and the Government Performance
and Results Act (GPRA)
reporting schedule. The first two-year fiscal period (biennium) would
begin October 1, 1999 (i.e.
fiscal year 2000).
President's Budget. S. 261 would require the President to
submit a two-year budget at the
beginning of the first session of a Congress. The President's budget
would cover both years in the
biennium and planning levels for four out-years. The current Mid-
session Review would be
converted into a "Mid-biennium Review," which the President would
submit by February 15 of
the second session of each Congress.
Congressional Budget Resolution. On the congressional side,
S. 261 would require the Congress
to adopt a two-year budget resolution during the first session of each
Congress. Instead of
enforcing the first fiscal year and the sum of the five years as under
current law, the budget
resolution would establish binding levels for both years of the
biennium and the sum of the
six-year period. The bill would also modify the time frames in the
Senate's 10-year pay-as-you-go
point of order to provide that legislation could not increase the
deficit for the biennium, the sum
of the first six years, and the sum of the last four years.
Appropriations. Following adoption of the two-year budget
resolution, S. 261 would require the
Congress to enact two-year appropriations during the first session of
Congress. The budget
resolution allocations to the appropriations and authorizing
committees -- referred to by
budgeteers as 302(a) and 602(a) allocations -- would include
allocations for both fiscal years in
the biennium. The bill also provides two measures designed to avoid
the continuation of annual
appropriations: (1) the bill would establish a new majority point of
order against appropriations
bills that fail to cover two years; and (2) if an appropriations bill
were enacted that failed to
appropriate money for the second year of the biennium, funding would
be automatically
appropriated for the second year at the first year's level. We have
some concerns about this latter
provision, which I will comment on later.
Second Year: Authorization legislation and enhanced oversight.
S. 261 seeks to make budgeting
and appropriating a priority for the first session of Congress, and
authorizing legislation and
oversight the second year priority. In order to accomplish this, S.
261 would establish a majority
point of order against consideration of authorization and revenue
legislation until the completion
of the biennial budget resolution, reconciliation legislation (if any)
and the 13 biennial
appropriations bills. In addition, the bill provides a majority point
of order against authorizing and
revenue legislation that cover less than two years, except those
measures limited to temporary
programs or activities lasting less than two years. The bill also
requires the General Accounting
Office, during the second session of each Congress, to give priority
to requests from Congress for
audits and evaluations of Government programs and activities.
Fiscal period. Finally, the bill would require OMB to
submit a report to the Budget Committees,
within six months of enactment, analyzing the impact and feasibility
of changing the current fiscal
year, to a two-year fiscal period.
Biennial budgeting should be comprehensive
Let me say, before going any further, that I commend the authors of
the bill for making this
legislation comprehensive. For biennial budgeting to be feasible, it
is essential that each phase of
the budget process -- the President's budget, the congressional budget
resolution, and
appropriations -- be conducted on a two-year basis.
In this regard, it might be helpful to consider a concrete example
of what can happen if the
approach is not comprehensive. As you know, the Department of Defense
(DOD) has been
submitting a biennial budget request to the Congress, as required by
PL 99-145 (the 1986 Defense
Authorization Bill). Nevertheless, the Congress has continued to
enact appropriations for DOD
on an annual basis. As a result of continuing annual appropriations,
the authorizers resumed
enacting annual authorization bills for DOD after the first, and only,
two-year authorization
expired. As a result, DOD is proposing legislation this year to
repeal the biennial budgeting
requirement for defense. (The biennial budgeting requirement for the
Coast Guard was repealed
for similar reasons in 1991.) What this demonstrates is that for
biennial budgeting to work, there
must be biennial appropriations -- in addition to a biennial request
from the Administration and
biennial authorizations.
Potential Benefits of S. 261
I'd like to take a few minutes now to address the potential
advantages of biennial budgeting.
Greater stability and predictability in the budget process.
One of the more compelling advantages
of biennial appropriations is that it could provide greater stability
and predictability for those who
are served by government programs -- be they individuals receiving
government assistance or
states and non-profits receiving government grants. Under the current
annual budget process,
individuals and organizations receiving government benefits or paying
government fees, may not
know from year to year exactly what level of resources will be
available to them. A biennial
budget offers the possibility of more budgetary certainty which would
enable better long-term
planning. The potential for more stability in funding would depend,
of course, on the extent to
which two-year appropriations are actually enacted, and whether the
second year appropriations
remain unchanged by supplemental bills. That is a question on which I
would defer to the
Members of this Committee.
Better use of time. Another often-cited benefit of biennial
budgeting is the potential for Congress
and the Executive Branch to better utilize time and resources.
Consider what happens every year
during the months of September and October: the Congress and the
Administration are typically
negotiating final appropriations levels for the new fiscal year, and
simultaneously the agencies and
departments of the Executive Branch are expending great amounts of
time developing their
budget requests for the subsequent fiscal year.
This annual ritual of completing one budget and simultaneously
developing the next budget may
be unnecessary for many programs. The reality is that changes from
one year to the next in many
of the budget accounts are relatively small and predictable. S. 261,
by establishing two-year
appropriations, could save time for both the Congress and the
Executive Branch.
Some have suggested that biennial budgeting will inevitably
increase the number of supplemental
appropriations -- nullifying any potential time-saving effects. While
biennial budgeting could lead
to a greater need for supplementals, I think we can safely predict
that the overall expenditure of
time and resources on budgeting could be at least somewhat reduced in
comparison to annual
budgeting.
More time for oversight and program management. It has also
been suggested that biennial
budgeting, by concentrating budget decisions in the first year of each
biennium, would free up
time for additional congressional oversight and agency management
initiatives. I would defer to
the Members of this Committee to assess the adequacy of current
congressional oversight. From
the vantage point of the Executive Branch, there already appears to be
a significant amount of
oversight by the authorizing committees, as well as the oversight that
naturally occurs as part of
annual appropriations hearings.
With regard to agency management, it is plausible to expect that
moving from annual budget
preparation to a biennial cycle would free up some time in the second
year of the biennium for
program managers to increase their efforts on management and long-
range planning. At the same
time, it is probably also true that the task of preparing precise
budget numbers for two years,
instead of one, would somewhat intensify the budget preparation
process for the first year of each
biennium.
Timing of the President's Budget S. 261 would provide an
incoming President with additional
time (until the first Monday in April) to present a budget. This
provision addresses a time crunch
which all new Presidents face. In our judgement, this would be a
sensible and realistic amendment
to our current budget deadlines -- whether or not we move to a
biennial cycle.
Other Issues to Consider
Automatic Continuing Resolution. Under S. 261, if an
appropriations bill were enacted that failed
to appropriate money for the second year of the biennium, funding
would be automatically
appropriated for the second year at the first year's level. This
would, in effect, be an automatic
continuing resolution. While I appreciate the objective of ensuring
biennial appropriations, I
wonder whether this mechanism might actually have the opposite effect.
The fact of an automatic
continuing resolution for the second year might actually be a
disincentive to complete work on the
second year of appropriations.
Point of Order against non-biennial appropriations. While I
defer to the Members of this
Committee on the operation of parliamentary points of order, it has
been suggested that the point
of order in S. 261 against appropriations bills which provide funds
"for a period other than each of
the fiscal years of the biennium" may be too restrictive. For
example, is it possible that such a
point of order might unintentionally prohibit appropriations which
provide multiyear or forward
funding, or advance appropriations?
Technical corrections. In the process of reviewing the
bill, our staff have identified a few
provisions which appear to require technical corrections. I have
attached a list of proposed
technical corrections to my prepared testimony.
S. 261 and the Government Performance and Results Act
(GPRA)
In addition to establishing biennial budgeting, S. 261 would also
adjust the GPRA timetable to the
two-year cycle. We understand the proposed schedule to be the
following: strategic plans would
be revised every four years, beginning with plans that are due in the
year 2000; and the
performance plans would cover a two year period, with a preliminary
draft sent by the agency to
its congressional committees of jurisdiction by March 31 of each even-
numbered year. In
addition, S. 261 would require the following: a government-wide
program performance report to
be prepared by OMB; executive summaries (limited to 10 performance
goals) for all agency plans
and reports; and sections in agency performance reports which identify
provisions of law that
hinder their ability to carry out the agency's mission, along with
recommendations for appropriate
legislative changes.
While the Administration supports biennial budgeting, we have
concerns about amending GPRA
beyond what is minimally necessary to have it conform with the general
time-sequence of a
biennial budget process. In this respect, we would be happy to work
with your staff to define a
complete set of changes to current law, beyond those now in the bill,
that would accomplish this
end.
Our concern with any additional changes at this time are based on
the fact that we are just
beginning government-wide implementation of this Act. Therefore, it
is too soon to be
introducing new requirements which may disrupt the progress the
agencies and Congress are
beginning to make in this area. We will have a much better sense of
what, if any, changes to
GPRA should be made after we all have experience with its
implementation, can assess the
usefulness and value of its plans and reports, and are able to
determine whether it is helping to
improve the government's delivery of programs and services.
Conclusion
In sum, I would like to complement you, Mr. Chairman, for holding
these hearings on biennial
budgeting, and Senators Domenici, Ford, and Thomas for introducing
this legislation. Biennial
budgeting presents us with some interesting possibilities for
improving the efficiency and
effectiveness of the Federal government. S. 261 is a good starting
point for developing biennial
budget legislation and I look forward to working closely with this
Committee and the Budget
Committee as you proceed.
Technical Comments on S. 261
Following are some of the technical comments on S. 261 provided
by OMB staff. However, this
is not intended to be a comprehensive list. As the Governmental
Affairs and Budget Committees
proceed with consideration of this legislation, OMB would be pleased
to provide additional
comments and suggestions.
o Page 2, line 8, under "last day of session," "authorizing a new
budget authority" should be
"authorizing new budget authority"
o Pages 17-18: The bill would amend 31 USC 1106(a) to move the
Mid-Session Review from
July of each year to February of each second session of Congress, i.e.
transforming it into a
Mid-Biennium Review. However, the current law requirement in section
31 USC 1106(b) for a
July 16 update of changes in BA requested, estimated outlays, and
estimated receipts, has not
been changed. It is unclear whether it was the intention of the
drafters to have both a July update,
and a Mid-Biennium Review.
o Page 19, lines 9-16: note that 31 USC 1114 has been repealed.
o Page 24, lines 21-23, incorrectly cites the VA/HUD appropriations bill. Insert the following: "Departments of Veterans Affairs and Housing and Urban Development, and independent agencies."
