Expanding the Horizons of Federal Finance Management?
In the political landscape of Washington D.C., a shift towards more partisan budgeting is causing ripples of uncertainty for federal agencies and their spending plans. This change, as expressed by Office of Management and Budget Director Russ Vought, aims to rein in spending without the need for Democratic input on Capitol Hill.
The "less bipartisan" approach to budgeting means the budget approval process may become more contentious and unpredictable. Agencies trying to spend their 2025 funds could face potential delays or disruptions due to increased risks of shutdowns or stopgap funding measures, partisan rescissions, and stalled or contested budget bills.
One concern for some on Capitol Hill is the concept of "pocket rescissions," where money could be withheld within the last period of the fiscal year, adding to the challenges for agencies and contractors as they approach the end of the fiscal year, particularly in August and September.
Meanwhile, the FBI relocation problem has been resolved, allowing the Commerce Justice Science Bill to move forward. The Senate is set to vote on the military construction VA bill this week, which could potentially include more than just the specified appropriations.
The House and Senate have each passed two bills for appropriations on their respective sides. The budget process now requires just a simple majority in the Senate for rescission packages, unlike many other things that take 60 votes, making it a unique aspect of this process.
This shift towards more partisan budgeting has already been demonstrated with the recent passage of a rescission bill, which focused on clawing back $9 billion, with the exception of $400 million for the President's Emergency Plan for AIDS Relief. This was the first time in about 25 years that a rescission bill made it through the process.
As the August break approaches, the Senate has district court nominees and potentially another circuit court judge to be confirmed. The NDAA versions are not expected to be acted upon before the recess.
In addition, the House is considering changes to the GENIUS Act and may attach them to later legislation such as the CLARITY Act. The GENIUS Act, which regulates stable coins, has been signed into law. The Department of Government Efficiency (DOGE) had many more places in mind when making recommendations for spending cuts, suggesting that more rescission packages could be on the horizon, particularly targeting the Education Department due to significant curtailings or letting-goes of people.
The administration, led by Director Vought, plans to send more rescission packages, adding to the uncertainties for agencies and contractors as they navigate this more fractured appropriations landscape. The end of the fiscal year, August and September, is when a lot of agencies execute the majority of their appropriation, making the prospect of more rescission packages challenging. September 30th, the key date for whatever can be done ahead of it in July, looms large as agencies prepare for the potential impact of these changes.
- The workforce of federal agencies may face significant challenges due to the reimagined budgeting approach, as more partisan budgeting increases the risks of shutdowns, stopgap funding measures, and stalled budget bills.
- With the administration's intention to send more rescission packages, the finance sector, including businesses and contractors, could encounter added uncertainties, as these packages may target certain departments, such as Education, during the crucial end of the fiscal year.
