Looking Ahead: FY 2014 Issues Creating FY 2015 Uncertainty

When lawmakers return from August recess in a few weeks they will turn their attention to FY 2014 government funding, which requires appropriations to be passed by October 1 to avoid a government shutdown. But an article on Federal News Radio shows the executive branch is already planning for the following year, FY 2015, and the uncertainty over how the FY2014 appropriations will play out is causing issues. While being unable to fully anticipate agency budgets an additional year in advance is not all that uncommon, the problem is particularly acute because of uncertainty over how the sequester will be handled for FY 2014, let alone successive years.

While many people might naturally associate February as the beginning of the budget process, with the usual release of the President's Budget around that time (this year and the beginning of new administrations being exceptions), the reality is that the process starts far in advance. Agencies must submit their initial requests to the OMB by next month, starting a back-and-forth as agencies and OMB haggle over funding levels and priorities. Complicating matters for FY 2015 is, of course, the sequester, which will reduce discretionary budget authority in that year by $91 billion. Considering that there are many possible ways the sequester could be resolved, if it is at all, it is difficult to anticipate what kind of spending limit will bound the executive branch.

The article quotes former OMB official Robert Shea:

What that means is we're not able to focus spending cuts on programs that aren't working as well and re-allocate those funds to programs we know to be working...We also don't have a lot of good information to use to cut programs. That's why you see across-the-board furloughs rather than more targeted spending cuts at things that really wouldn't impact performance.

Of course, lawmakers' frequent last minute solutions and haggling over funding levels has made the appropriations process increasingly difficult. It would be best for planning and policy purposes for them to settle funding levels by coming up with a permanent solution to the sequester, so that there is some predictability in discretionary spending.