The Impact of Shifting from an Annual Federal Budget Cycle to a Biennial Budget Cycle: A Look at the States and the Implications for Congress

Abstract:     
This paper uses a public choice framework to consider the impact of Congressional adoption of a biennial federal budget. The introductory chapters detail the evolution of the current Congressional annual budget and explain how budgetary institutions affect the power structures inside Congress. The relevant public choice literature on budgetary institutions is also explored. Proponents of biennial budgeting argue that changing to a biennial process will provide several benefits to Congress: reduced discretionary spending through more Congressional control over the process, more time for oversight of programs, and greater transparency. Chapter 3 constructs a model of state spending to examine the relationship between budget periodicity and spending by constructing a model of state spending. In contrast to most of the literature on budget periodicity, this chapter finds a positive relationship between spending and biennial budgets. Chapter 4 conducts two case studies of states that have recently moved from annual budgeting to biennial budgeting to determine how the changes affected the influence and power of Appropriators relative to Authorizers. Anecdotal evidence from Connecticut suggests Appropriators' influence is negatively affected by a move to a two-year budget. Campaign contribution evidence from Arizona confirms that interest groups perceive this reduction in the power of Appropriators and, accordingly, donate less to Appropriators relative to Authorizers following a shift to biennial budgeting. Chapter 5 considers whether timing and transparency problems under an annual budget are technical issues that could be cured by extending the budget period and finds that instead these problems the political realities facing legislators. Thus, changing the budget period will not fix these issues and may exacerbate them. This dissertation finds that moving to a federal biennial budget process would increase the pressure on Congressional budgeters to spend, shift power away from Appropriators, and not solve timing and transparency problems in the federal budget.

Number of Pages in PDF File: 132

Keywords: budget, public choice, legislator, vote trading, log rolling, appropriations

JEL Classification: D71, D72, D73, D78, E62, H50, H60, H61, H70, H72

working papers series