A Case Against Biennial Budgeting

​The Bipartisan Budget Act of 2018 established the Joint Select Committee on Budget and Appropriations Process Reform to consider changes in the congressional budget process. Following many appropriations cycles of repeated continuing resolutions, threatened or actual government shutdowns, and huge catch-all appropriations bills, the Committee is tasked with determining how the budget and appropriations process can be improved.
 
The Committee is reviewing several budget process options, including a shift in the start of the federal fiscal year, a revised make-up of the House and Senate Budget Committees, and limitations on budget gimmicks. In addition, a switch from annual budgets to biennial budgets receives significant attention.
 
Biennial budgeting for the federal government is an idea that has been around for decades. Many advocates for biennial budgeting look to the example of states that have biennial budgeting in place. Over 40 states had biennial budgets in the 1940s, although the number is now down to 19 according to the National Conference of State Legislatures. States have made a shift to annual budgeting as more legislatures move toward annual sessions.
 
Senator Michael Enzi (R-WY), Chairman of the Senate Budget Committee, proposes a biennial budget plan that is catching some interest. The Enzi plan would divide the 12 annual appropriations bills into two groups of six, with one group to be considered in odd-numbered years and the other group to be considered in even numbered years. Each appropriations bill would fund programs for two fiscal years.
 
Biennial advocates such as Sen. Enzi believe that making budget decisions every two years will give Congress more time to perform oversight over agencies, more time to get its appropriations work completed, and will improve long-term budget planning. But these notions are based on either wishful thinking or are not supported by facts.
 
Here are five reasons biennial budgeting should be viewed with skepticism.
 
There will be less oversight, not more. An effective congressional oversight tool is the annual review of federal agencies’ budgets and the enactment of annual appropriations bills. So far in 2018, the House Appropriations Committee has held 74 hearings. These hearings provide an opportunity for Congress to put agency heads on the record. While the stated purpose of most appropriations hearings is to review agency budgets, these hearings cover a much broader range of topics since policy and management issues inevitable come up.
 
Appropriations oversight also involves more than holding hearings. The committees study annual budget justifications prepared by agencies, receive briefings from agency officials, and hold officials accountable through directives included in bills and their accompanying reports. Appropriations bills and reports include a multitude of reporting requirements directed at the Executive Branch. Many of these reporting requirements are new each year or change from the prior year depending on new information and agency actions. Annual appropriations bills are an important tool used to enforce these directives – an agency may find that Congress is less willing to accommodate its budget request in the following year if it ignores an appropriations directive.
 
A shift to two-year budgeting weakens these oversight tools. The Executive Branch would have more of an incentive to delay responding to appropriations oversight in the hope that Congress focuses its attention elsewhere in two years. Matters that require a quick response from agencies may languish if agencies believe it’s in their interest to stall. And, while biennial budget advocates are quick to claim that there will be more time for congressional oversight during the second year, the appropriations committees will lack the enforcement tool of an imminent funding bill to encourage an agency’s cooperation. Further, for other congressional committees that exercise oversight, there will be the same amount of time available for oversight regardless of whether appropriations are on a one-year or two-year cycle.
 
Budget plans will be outdated. With an annual budget process, federal agencies typically start developing the Administration’s budget request 16 to 18 months prior to the beginning of the fiscal year. By June, the Office of Management and Budget (OMB) usually gives agencies budget guidance for preparing the budget request to Congress that is due to be submitted the following February and enacted (in an ideal world) by October 1.
 
A lot can change within the current 16-month lead time, and, with biennial budgeting, that lead time becomes 28 months for year two of the budget. Add to that the fact that budgets are meant to allocate the resources an agency needs for the full fiscal year; therefore, biennial budgeting asks agencies to project their needs up to 40 months into the future. OMB policy makers, who typically make decisions on agency budgets in November, would need to use their crystal balls to foretell what funding is needed up to 35 months ahead.
 
It’s already a challenge for the Executive Branch and Congress to project resource requirements so many months before the funding is used by agencies. Adding another 12 months to this process would significantly reduce the reliability of the budgets agencies depend on to efficiently and effectively run their programs.
 
More frequent supplemental appropriations bills are likely. Outdated budget plans increase the likelihood that Congress will take up supplemental appropriations bills more frequently. Supplemental bills add money to programs that run short of funding for any reason. For example, supplemental bills have been used to provide more resources to disaster relief and recovery activities in the wake of natural disasters, although any funding shortfall could be part of a supplemental bill.
 
More supplemental appropriations diminish, at least in part, one key argument in support of biennial budgeting – that Congress will have more time to devote to other tasks, such as oversight, in years Congress isn’t working on appropriations (“off years”). However, some will say that even if biennial budgeting leads to additional supplemental appropriations bills each off year, the advantages of biennial budgeting, including the elimination of the need to consider regular appropriations bills in the off years, will outweigh the time and energy spent on supplemental bills.
 
Biennial advocates should be careful what they wish for. A supplemental bill in an off year will likely include funding adjustments for most or all 12 regular appropriations bills. The supplemental will be a Christmas tree that most members of the Appropriations Committees and Congress will want to decorate with their favorite ornament (funding for a favored program or inclusion of policy-related legislation). The bill may rival – perhaps not in overall size but in complexity – the omnibus appropriations bills that are criticized for being unwieldy and lacking transparency.
 
Adding supplemental funding for programs that are short on money will create another thorny issue. Presumably, Congress will have already appropriated the maximum-allowed funding levels for the off year based on spending caps that enforce overall discretionary spending. Congress will face a choice if it acts to increase funding for some programs: it can cut spending in other programs and move those dollars to programs that need the money, or it can evade the spending caps through budget gimmicks (such as “cuts” that don’t result in any actual budget savings) that get around the spending caps. Real program cuts that reduce lower-priority activities to free up funds for higher priorities are the better option for honest budgeting, but cuts will come with political landmines since there will always be a constituency supporting a program that is cut. Many in Congress will have an incentive to avoid the tough politics and look instead for budget gimmicks. Such incentives may be especially strong for congressional leaders who want to protect their party’s members from politically difficult cuts in an election year.
 
Another negative factor relating to supplemental bills is the potential for less transparency. Most recent supplementals have followed a truncated process where the bill doesn’t move through the Appropriations Committee. Instead, a bill is drafted and introduced by committee leadership and heads straight to the floor. One consequence of this approach is that Committee members have less opportunity for input. Another consequence is that there is no committee report to accompany the bill. As previously mentioned, committee reports and the directives they contain are important oversight tools. While there’s no reason supplementals have to shortcut the regular committee process, there’s plenty of precedent for doing so with supplemental bills if Congress wants to push a bill through quickly for any reason at all.
 
A “6 and 6” biennial plan (the Enzi plan) will have unintended consequences. The Enzi plan, which specifies that two-year funding will be appropriated in six bills in year one and in the other six in year two, raises a unique set of concerns.
 
Sen. Enzi’s proposal would specify the following appropriations bills to be considered in the odd-numbered years: 1) Energy and Water; 2) Financial Services; 3) Homeland Security; 4) Interior, Environment; 5) Labor-Health and Human Services-Education; and 6) State-Foreign Operations. The bills in even-numbered years are: 1) Agriculture; 2) Commerce, Justice, Science; 3) Defense; 4) Legislative Branch; 5) Military Construction, Veterans Affairs; and 6) Transportation, Housing and Urban Development. Therefore, half of the bills will become “election year bills,” while the other half will be more insulated from election year politics.
 
Enzi’s arrangement makes some sense since the bills that are currently the most difficult to pass (for example, Labor-HHS-Education) come up in non-election years. It also places two of the currently most popular and bipartisan bills – Defense and Military Construction, Veterans Affairs – in election years. Perhaps that’s a smart move since election-year politics can complicate Congress’s ability to complete appropriations.
 
However, good politics in 2018 doesn’t necessarily mean good politics in the future. National priorities and political control of Congress and the White House change over time. Bills that have bipartisan support now may not in the future. The Homeland Security bill is a good example. For several years after the bill was created in 2003, it had wide bipartisan support. In 2018, it’s one of the most controversial and difficult appropriations bills due to immigration issues, including the President’s request for a border wall. The Enzi plan would increase election year political pressures on the bills considered in even-numbered years, so even if the bills may be popular and bipartisan today, there will be election year incentives for Congress to find new political battles to fight on those bills.
 
The Enzi plan also locks into statutory law which appropriations bills come up each year, making the timing of appropriations bills difficult to adapt to changing political and other circumstances. The law would need to be amended any time Congress wanted to change the timing of any bill from one biennial year to another.
 
Biennial budgeting does nothing to fix the real problem. Proponents of budget process reform lament the absence of a working budget and appropriations process. They view process changes as increasing the possibility that budgets will be completed on time with fewer and shorter continuing resolutions, government shutdowns will be avoided, and massive end-of-year omnibus bills will be eliminated.
 
Those would be all great outcomes, but process change won’t address the real problem, which is the lack of political will to prioritize a functioning budget process over political gamesmanship. The past two decades have seen a sharp deterioration of Congress’s willingness to place appropriations for government operations – a constitutional requirement – before politics. Both political parties see and seize opportunities to use the appropriations process to score political points. The result is that compromise becomes harder and hyper-partisanship takes over. A significant reason for this trend is that there is much less incentive for House Members to strike deals across the aisle when those Members are elected to districts that are drawn to ensure safe majorities for one party or the other. Attempts to find a middle ground and to compromise with the other side lead to primary challenges from the far right or the far left, further driving the ideology of the parties to the extremes.
 
Former House Appropriations Chairman David Obey (D-WI) testified in July on this point (as well as on why biennial budgeting is a bad idea) before the Joint Select Committee on Budget and Appropriations Process Reform. He spoke on how bipartisanship helped ensure that all appropriations bills were finished on time when he chaired the Appropriations Committee in 1994, and how gerrymandered districts kill incentives to compromise. He recommended that the Committee “recognize that the main problem is not procedural, it is political. Little will change on the deficit without a change in attitude.” He asked the Committee to “remember your basic problem is not the budget process. The budget process is simply one example of how our political system has crippled the legislative system.”
 
I hope congressional leaders and policymakers considering changes to the budget process will agree.