Budget Bonanza: How Congress Funds the Federal Government

Over the past few months, Congress has been embroiled in a series of budget negotiations. It seems that every few weeks, the government is headed towards a full or partial shutdown before Congress temporarily extends funding at the eleventh hour - before repeating the process just a few weeks later. As the government approaches another potential partial shutdown later this week, let's consider what is happening behind the scenes and what is at stake in the next round of negotiations.

What is happening with budget negotiations?

The government is funded through 12 individual spending bills. These bills are meticulously crafted by various committees, each focusing on different segments of government operations such as education, health care, and defense. Through these bills, Congress allocates specific amounts of money that will be spent in each area, effectively determining the priorities and projects that will receive funding for the fiscal year, which lasts from October 1 to September 30.

Budget negotiations for the 2024 fiscal year began in summer 2023, but divisions within the House and Senate made it clear by September 2023 that it would be nearly impossible for Congress to pass a budget bill. Rather than shut down the government, Congress decided to pass a continuing resolution (or CR), a temporary funding measure that maintains government operations at existing spending levels when a full-year budget has not been approved.

The initial continuing resolution passed in September 2023 extended funding through November 17, 2024. In mid-November 2023, for the first time ever, Congress passed two separate continuing resolutions extending funding for military, transportation, and housing through January 19, 2024, and other departments through February 2, 2024. While Congress traditionally passes one continuing resolution at a time, extending funding for the entire federal government through a single end date, Congress adopted a new approach by creating two different expiration dates for the next round of funding. This new approach is called a laddered CR. In mid-January 2024, Congress passed two additional continuing resolutions extending the funding to March 1, 2024 and March 8, 2024. In late February, Congress pushed back the deadlines to March 8, 2024 and March 22, 2024.

Hours before the March 8 deadline, Congress successfully passed a budget encompassing six spending bills. This funding will last until the end of the fiscal year. Congress now has until March 22 to figure out the six remaining spending bills unless it votes to give itself more time.

What is a laddered CR?

Unlike a traditional CR, which provides a temporary extension of prior fiscal year funding levels to all government operations uniformly until a new deadline is reached or the annual appropriations bills are passed, a laddered CR introduces a mechanism for incremental adjustments in funding attached to multiple different deadlines. This approach offers a layer of flexibility not present in standard continuing resolutions, aiming to smooth out the funding process and reduce the likelihood of total government shutdowns. However, it does leave more room for the possibility of partial government shutdowns. The series of laddered CRs since November 2023 is highly unusual.

What is at stake when the bills expire?

On Friday, March 8, President Biden signed a $460 billion spending package to avert a shutdown of critical federal departments even as lawmakers continue to wrestle over a financing blueprint for many other agencies more than halfway into the current fiscal year. That package included Agriculture, Energy-Water, Commerce-Justice-Science, Interior-Environment, Military Construction-Veterans Affairs, and Transportation-Housing and Urban Development spending bills. Included in this round of funding are essential services provided by the federal government such as SNAP (Supplemental Nutrition Assistance Program), housing vouchers, and TANF (Temporary Assistance for Needy Families). By passing a spending package and avoiding a shutdown, these programs will continue to operate without disruptions and delays in their services. Many low-income families and families of color rely on these essential programs, and we are grateful that such vulnerable communities will not be negatively impacted by a shutdown.

The programs that expire March 22 are Defense, Financial Services-General Government, Homeland Security, Labor-HHS-Education, Legislative Branch, and State-Foreign Operations bills. Among other things, these bills impact U.S. Customs and Border Protection (CBP) whose essential personnel, including Border Patrol agents, are required to work without pay, but whose staffing levels and operations may be impacted. Federal courts could partially function for a limited time, with criminal prosecutions proceeding while civil trials are postponed. Additionally, the Head Start preschool program might face setbacks, affecting 10,000 children from low-income families.

What happens next?

Now that Congress has passed a spending package for six appropriations bills, they are halfway to finally ending negotiations for this fiscal year. Congress must pass either another full spending package or another CR for those six bills by March 22 to avoid a shutdown. If Congress passes yet another CR rather than the full budget, negotiations will resume ahead of a potential shutdown in a few weeks. If Congress is able to pass a full budget, all federally-funded programs would be set through the end of September. We will continue to monitor the funding situation over the coming days and weeks.