Don’t Call It a Budget (Yet)

by Chris Wiedemann, Senior Analyst

With the Senate passage of the two-year Murray-Ryan budget deal, President Obama is on course to sign the first budget resolution from a divided Congress since 1986. This has caused Washington observers and members of industry some relief, since it looks like we can finally plan for a year and a half of relative budgetary certainty (the bill runs through the end of FY15). In fact, much of the coverage around the bill has suggested that it has solved some of our recent problems, and many in industry – and the general public – are treating this bill as though it gives our customers money to spend for the next 22 months.

This bill raises the sequester spending caps, so once the process is finished the government will have more money to spend than they thought. Unfortunately, the process isn’t quite finished yet.

Most of the confusion here comes down to the difference between a budget – what we have now – and appropriations, the process that actually grants departments and agencies (DOD, DHS, VA, etc.) the money they need to operate and, more importantly, purchase new products. The budget bill that we just got sets a top line number for total federal spending in the rest of FY14 and all of FY15, but it doesn’t divide that money up among the various arms of the government. It now falls on the appropriations committees to allocate funds, and for their recommendations to be rounded up into a spending bill called an “omnibus,” which will outline spending plans department by department.

The good news is that both the House and Senate appropriations committees already have FY14 bills, and although most of them never saw the light of a floor vote, there is already a basis for funding allocations through the rest of the year.

The bad news (sorry if this sounds familiar) is that Congress doesn’t resume until January 2^nd. Since our current CR expires on January 15^th, that means lawmakers will have twelve days to roll up their draft appropriations bills into omnibuses, reconcile the House and Senate versions (which will certainly be different), then pass the reconciled version through both chambers. That timeframe probably means that some agencies will have to deal with another CR – so the final package will be something called a “minibus,” where some agencies get new appropriations, while others have to work with last year’s numbers again.

The upshot here is that we’re not quite at the finish line yet. Luckily the agreement we have covers most of the areas that cause arguments in Congress. The House and Senate are likely to have different ideas about which agencies should be allocated what, but brass tacks discussions like that tend to be less contentious – and again, there is already a baseline to work off in the form of the FY14 appropriations bills that didn’t pass. All of that adds up to clarity – so even if your customers don’t get new appropriations, they will be able to operate for the rest of the fiscal year without worrying about their funding levels changing. The picture starts to become even rosier when we look at FY15 appropriations. Since the framework for total spending is already in place, it’s very possible that we will have a real budget – 12 separate appropriations bills that all pass into law – for the first time since FY08. If that happens, it would really be cause for celebration.