Panel urges Congress to scrap annual budget process

Congress should switch from an annual budget process to a two-year cycle to provide greater stability for federal agencies and conduct better oversight of government programs, lawmakers and witnesses said during a hearing Tuesday on Capitol Hill.

Democrats and Republicans both expressed support for approving biennial agency budgets, or even multi-year appropriations, to fix what has become a routine, last-minute process of passing continuing resolutions to keep the government operating.

The current process is "no way to run a budget or a federal government," said Sen. Jeff Sessions, R-Ala., ranking member of the Senate Budget Committee. Chairman Kent Conrad, D-N.D., said he used to favor an annual budget process, but the reality is that it's no longer possible to pass 12 spending bills each year in the current environment. "Can you imagine running one of these agencies operating on a continuing resolution for one month, three months, six months?" he asked, rhetorically, in his opening statement. In fiscal 2011, Congress passed 8 stopgap funding measures. Congress last passed all the appropriations bills on time in 1994.

Biennial budgeting would require Congress to enact a two-year budget during its first session, and then focus on oversight of federal programs, authorizing legislation and necessary measures to respond to emergencies or unforeseen events during the second session. Many state, local and foreign governments operate under biennial or multi-year spending cycles. This is not the first time that Congress has considered shifting to a modified budget schedule. But the epic budget battles this year, which had the government on the verge of shutting down three times, as well as the out-of-control deficit, have made the need for reform more urgent.

"In recent years, there is ample evidence that Congress' inability to pass appropriations bills on time has forced start-stop-start-stop management practices that have undermined the effort to produce better government services at lower costs," said Donald Kettl, dean of the University of Maryland's School of Public Policy. "More predictability in the flow of funds to agency managers would allow them to plan far better how to make the most use of the tax dollars Congress provides."

Other witnesses agreed. "A longer cycle could also create better managerial incentives in terms of allowing agency heads to determine when over the course of two years, rather than one, they should spend down their allotted resources," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. MacGuineas also urged lawmakers to consider a multi-year budget process, with flexibility built in to make changes as needed. "In addition to adding more stability, multi-year budgets have the advantage of becoming the default budget and staying in place until they are replaced with a new budget, so such a change would end the detrimental practice of missed deadlines, last minute budgeting, and near government shutdowns," she said.

The cons to biennial budgeting, as the witnesses pointed out, included less flexibility for agencies since they would have to plan their budgets two years in advance and an increase in the number of supplemental appropriations bills. Witnesses, however, said the advantages of moving to such as process outweigh the potential drawbacks.

"This is an idea whose time has come," said David Kendall, senior fellow for health and fiscal policy at the Third Way, a Washington think tank. Kendall said lawmakers could use the second year to focus on the effectiveness of government programs in part by talking to the federal workforce. "When was the last time anyone you know of in Congress actually visited a federal agency?" Kendall asked during his testimony. Sen. Mike Enzi, R-Wyo., a member of the Budget Committee who has a degree in accounting, said he has visited federal agencies and supports linking performance results to budgets as outlined in the 1993 Government Performance and Results Act and its subsequent 2010 modernization measure.

In the Senate, Republican Johnny Isakson of Georgia and Democrat Jeanne Shaheen of New Hampshire have introduced legislation that would move Congress to a two-year budget cycle. Rep. David Dreier, R-Calif., is sponsoring a similar bill in the House.

CLARIFICATION: The number of spending bills varies by year. Currently there are 12 spending bills under consideration by Congress.