The Congressional Budget Process, as set out in the 1974 Budget Act, provides Congress with a procedure establishing appropriate spending levels and revenue sources for each year. The process is a method for coordinating decisions on the financial behavior of government as Congress prepares for the upcoming fiscal year.

The President initiates the annual budget process by presenting his budget proposal to Congress on or before the first Monday in February of each year.

Congress is free to adopt or reject any of the President’s recommendations in its concurrent resolution, which imposes overall constraints on revenues and spending and distributes the overall constraint on spending among groups of programs and activities.

The House and Senate Budget Committees formulate their respective budget resolutions and report them to the floor for a vote. After each chamber passes its resolution, Congress forms the Budget Resolution Conference Committee to reconcile differences between House and Senate versions. After deliberation, the conference committee reports the concurrent resolution on the budget to the floor and the House and Senate must each vote to approve the concurrent resolution without amendment.

The concurrent resolution is nonbinding, is not signed by the President, and does not have the force of law. After Congress has completed action on a concurrent resolution on the budget for a fiscal year, however, it is generally not in order to consider legislation that does not conform to the constraints on spending and revenue set out in the resolution.

The concurrent resolution may contain language instructing House and Senate Authorizing Committees to determine and recommend changes in existing law in order to achieve the spending reductions or revenue increases that the committee must attain in order to conform to spending caps outlined in the budget resolution.

The budget resolution leaves to the discretion of the committee the specific changes that must be made to accomplish such spending levels. In each chamber, committees make these specific changes and submit them as recommendations to the Budget Committee. These recommendations are combined into an omnibus reconciliation bill and reported by the Committee on the Budget for consideration by the entire chamber.

The House and Senate send their respective reconciliation bills to conference, where the Budget Reconciliation Conference Committee holds sub-conferences with authorizing committees and reports an Omnibus Budget Reconciliation Act. Both chambers must pass the Omnibus Budget Reconciliation Act without amendment.

The President signs or may veto the Omnibus Budget Reconciliation Act. The signed act becomes a law.

Under the rules of both houses, the appropriation for a program or agency may not be considered until its authorization has been considered. Authorizers stipulate terms and conditions under which specific government programs or agencies act, and authorize the enactment of appropriations.

After authorization, each of the thirteen appropriations subcommittees divide the funds allocated to it by the budget resolution among the agency programs within its jurisdiction. The House and Senate must vote on each of the 13 bills separately and send each to conference. Each appropriations bill is reported from conference for a vote in both chambers and must be approved or rejected without amendment.

The President signs into law or may veto each of the 13 Appropriation Conference Reports.

The budget process must be completed by September 30, the end of the fiscal year. In recent years, not all of the appropriations bills have been signed into law by that date, requiring Congress to enact supplemental appropriations to provide funding in addition to that previously designated for the current fiscal year. Similarly, Congress often passes rescission bills to revoke money appropriated (but not yet spent) for the current fiscal year.

Breaches of the budget resolution are remedied by sequestration, or, automatic cancellations of spending authority. Sequestration results when the statutory criteria for the deficit, discretionary spending, or the Pay-As-You-Go (PAYGO) requirement has been exceeded. PAYGO requires that tax reductions or entitlement increases must be offset by tax increases or entitlement reductions.