The federal fiscal year runs from October 1 through September 30 and planning for the upcoming fiscal year begins as early as a year and a half prior to the fiscal year.
President’s Budget Request
The budget process officially commences on the first Monday of February when the President is required by law to provide a budget request to Congress for all Administration activities in the coming fiscal year. The President’s budget request to Congress includes a funding request for discretionary programs, mandatory programs, and taxes. The majority of housing programs are funded through the discretionary portion of the budget. The President’s funding request for discretionary programs varies from year to year to reflect the Administration’s evolving policy priorities.
Congressional Budget Resolution
Congress then considers the President’s request and the House and Senate Committees on the Budget prepare to craft a budget resolution. The budget resolution sets the overall framework for spending in the next fiscal year. The resolution includes a top-line spending figure for discretionary activities that the House and Senate Committees on Appropriations use as the maximum amount of funding that can be appropriated in the next fiscal year. This discretionary cap is an extraordinarily important figure for affordable housing programs because it either increases or decreases the overall amount of funding that the Committees on Appropriations allocate to fund HUD and USDA’s affordable housing activities. While the budget resolution establishes the overall spending level for the fiscal year, it does not go into detail as to how this funding will be allocated. The details are the job of the Committees on Appropriations, which begin their work after Congress agrees to a budget resolution.
To craft the budget resolution, first, the House and Senate Committees on the Budget hold hearings where administration officials testify regarding the President’s budget request. Committees on the Budget then each craft their own budget resolutions. The House and Senate must then agree on a final budget resolution. Because this is a resolution, not a bill, it does not have to be signed into law by the President.
Once Congress passes a budget resolution, the appropriations work begins. If Congress does not pass a budget resolution by the statutory deadline of April 15, however, the Committees on Appropriations are free to begin their appropriations work in the absence of a budget resolution.
Unlike the budget process, where the Administration initiates the process with a budget request, the appropriations process rests entirely in the hands of Congress.
After Congress passes a budget resolution, the House and Senate Committees on Appropriations divide the top-line figure for discretionary spending amongst their 12 respective appropriations Subcommittees. The two appropriations subcommittees that provide the majority of funding for affordable housing and community development programs are the Transportation, Housing and Urban Development, and Related Agencies (T-HUD) Subcommittee and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee in each House of Congress.
The Subcommittee must divide the amount of funding allocated by the Committee on Appropriations between the various priorities funded in its bill.
It is the job of the Subcommittees to determine the priority programs within each of their bills and provide sufficient funding for those priorities. In order to determine its priorities, the Subcommittees hold hearings where HUD or USDA officials testify regarding specific programs and initiatives included in the President’s request. Witnesses in these hearings provide a far greater level of detail on programmatic activity than witnesses testifying at Budget Committee hearings, which focus on overall proposed spending rather than particular activities.
After Appropriations Subcommittee hearings are completed, the Subcommittees craft their bills. The Subcommittees then hold a mark-up of their draft bills, and report out the bill they pass to the Appropriations Committee. The Appropriations Committees then hold a mark-up of each bill and report out those bills to Congress. The House and Senate must then negotiate a final T-HUD and Agriculture bill. Once these bills are passed by Congress, they are signed into law by the President.
If Congress does not pass its appropriations bills by the October 1 start of the fiscal year, it must provide funding for the period after the fiscal year ends and before an appropriations bill is passed. This funding is provided by a Continuing Resolution (CR). A CR continues funding for programs funded in the prior fiscal year, usually at the funding level from the year prior. If Congress does not pass a CR and appropriations bills have not been enacted, the government shuts down.