Appropriation Fundamentals

Annual appropriations are not required by the Constitution but it has been the custom since the First Congress to make appropriations for a single fiscal year. An appropriations law is one that provides federal agencies legal authority to incur obligations and the Treasury Department authority to make payments for designated purposes. (There are other types of laws that provide this same type authority for entitlements such as Social Security). Appropriations are usually used or obligated in the fiscal year for which they are provided, unless a law specifies that they be available for a longer period of time. An appropriation makes funds available for obligation but does not usually require that outlays occur in any particular year. Budget authority is obligated when agencies commit to a spending requirement, but outlays occur as checks are cashed to pay for obligations. The rate at which checks or payments are made for a particular program often occur for a period of more than one fiscal year, and is referred to as "obligation rates". An agency may not spend more than the amount appropriated to it and may only use these funds for the purposes and subject to the conditions provided by Congress. Detailed information on how funds are to be spent, along with other Congressional guidance, is provided in the reports and statements of managers accompanying the various appropriations measures. Agencies ordinarily abide by report language in spending appropriated funds, although the directives in the report are not legally binding. Generally, appropriations reports do not comment on every appropriation.

By precedent, appropriations originate in the House, with the Senate following suit. Congress generally passes three types of appropriation measures. General appropriation bills provide budget authority to multiple agencies for the next fiscal year. Supplemental appropriation bills provide additional budget authority during the current fiscal year. Continuing appropriation bills provide temporary (or full-year) funding for those agencies whose regular appropriation have not yet been enacted by the start of that fiscal year. The fiscal year begins on October 1 of each calendar year.