[Analytical Perspectives]
[Other Technical Presentations]
[18. Relationship of Budget Authority to Outlays]
[From the U.S. Government Publishing Office, www.gpo.gov]



[[Page 363]]

 
            18.  RELATIONSHIP OF BUDGET AUTHORITY TO OUTLAYS

  Budget authority is the authority for Federal agencies to enter into 
obligations that will result in immediate or future outlays.\1\ Budget 
authority is provided in laws, and Federal agencies cannot obligate the 
Government to make outlays until budget authority is provided. New 
budget authority for most Federal programs is provided in 13 annually 
enacted appropriations acts.\2\ However, new budget authority for more 
than half of all outlays, mainly trust fund spending, is made available 
through permanent appropriations under existing laws. For most trust 
funds the budget authority for a year is automatically appropriated 
under existing law from the available balance of their receipts and 
equals the estimated annual obligations of the funds for that year. 
Automatic appropriations also cover interest on the public debt, for 
which budget authority is provided under a permanent appropriation 
enacted in 1847; and the authority to spend offsetting collections 
credited to appropriation or fund accounts.
---------------------------------------------------------------------------
  \1\ For most budget accounts, the relationship of budget authority, 
obligations, and outlays is shown in a ``program and financing'' 
schedule in the budget Appendix volume. The concepts of budget 
authority, obligations, and outlays are discussed further in Chapter 23 
of the present volume, ``Budget System and Concepts and Glossary.''
  \2\ In recent years, many of the 13 ``regular'' appropriation bills 
have sometimes been consolidated into a single act.
---------------------------------------------------------------------------
  Not all of the new budget authority for the year 2000 will be 
obligated or spent in 2000: \3\
---------------------------------------------------------------------------
  \3\ This subject is also discussed in a separate OMB report, 
``Balances of Budget Authority,'' which can be purchased from the 
National Technical Information Service shortly after the budget is 
transmitted and is made available, with the other Budget documents, on 
the Internet.
---------------------------------------------------------------------------
    Budget authority for most trust funds comes from the 
          authority of these funds to spend their receipts (limited, in 
          most cases, by the estimated obligations). Any unexpended 
          balances remain available to these trust funds indefinitely to 
          finance future benefits and for other purposes specified by 
          law.
    Budget authority for most major construction and procurement 
          projects covers the entire cost estimated when the projects 
          are initiated, even though work will take place and outlays 
          will be made over a period extending beyond the year for which 
          the budget authority is enacted.
    Until recent years, budget authority for large portions of 
          the subsidized housing programs was equal to the Government's 
          estimated obligation to pay subsidies under contracts, which 
          extended for periods of up to 40 years. These contracts are 
          now for one year only, and budget authority is provided to 
          meet annual requirements.
    New budget authority for most other long-term contracts 
          covers the estimated maximum obligation of the Government.
    Budget authority for most education and job training 
          activity is appropriated for school or program years that 
          begin in the fourth quarter of the fiscal year. Most of these 
          funds result in outlays in the year after the year of 
          appropriation.
    Government enterprises are occasionally given budget 
          authority for standby reserves that will be used only in 
          special circumstances.
  As a result of these factors, a substantial amount of budget authority 
carries over from one year to the next. Most of this is earmarked for 
specific uses and is not available for new programs. A small part may 
never be obligated or spent, primarily the amount for contingencies that 
do not occur or reserves that never have to be used. Also, some budget 
authority results in an exchange of assets for which no corresponding 
net outlays are scored; budget authority backing the transfer of certain 
U.S. subscriptions to the International Monetary Fund is one example.
  As shown in the following chart, $318 billion of the outlays in 2000 
(18 percent of the total) will be made from budget authority enacted in 
previous years. At the same time, $336 billion of the new budget 
authority proposed for 2000 (19 percent of the total amount proposed) 
will not lead to outlays until future years. Thus, although outlays in 
2000 are, coincidentally, very nearly equal to budget authority for that 
year (99 percent), this coincidence only occurs because the prior-year 
authority that will produce 2000 outlays ($318 billion) nearly equals 
the new 2000 authority that will not be spent until future years ($336 
billion). In general, then, the total budget authority for a particular 
year is not directly indicative of that year's outlays, since it 
combines various types of budget authority that have different short-
term and long-term implications for budget obligations and outlays.

[[Page 364]]