Academic journal article Journal of Power and Ethics

Introduction to Fiscal Law

Academic journal article Journal of Power and Ethics

Introduction to Fiscal Law

Article excerpt


A. The Appropriations Process.

1. U.S. Constitution, Art. I, * 8, grants to Congress the power to ". . . lay and collect Taxes, Duties, Imports, and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States . . . ."

2. U.S. Constitution, Art. I, * 9, provides that "[N]o Money shall be drawn from the Treasury but in Consequence of an Appropriation made by Law. . . ."

B. Historical Perspective.

1. For many years after the adoption of the Constitution, executive departments exerted little fiscal control over the monies appropriated to them. During these years, departments commonly:

a. Obligated funds in advance of appropriations.

b. Commingled funds and used funds for purposes other than those for which they were appropriated.

c. Obligated or expended funds early in the fiscal year and then sought deficiency appropriations to continue operations.

MAJ Beth Berrigan
Contract & Fiscal Law Department
1st Basics for Ethics Counselors Workshop

2. Congress passed the Antideficiency Act (ADA), 31 U.S.C. * 1301, 1341, 1342, 1350, 1351, and 1511-1519 to curb the fiscal abuses by the executive departments which frequently created "coercive deficiencies" that required supplemental appropriations. The Act consists of several statutes that authorize administrative and criminal sanctions for the unlawful obligation and expenditure of appropriated funds.


A. Fiscal Year. The Federal Government's fiscal year begins on 1 October and ends on 30 September.

B. Period of Availability. Most appropriations are available for obligation for a limited period of time, e.g., one fiscal year for operation and maintenance appropriations. If activities do not obligate the funds during the period of availability, the funds expire and are generally unavailable for obligation thereafter.

C. Obligation. An obligation is any act that legally binds the government to make payment. Obligations represent the amounts of orders placed, contracts awarded, services received, and similar transactions during an accounting period that will require payment during the same or a future period. DFAS-IN Reg. 37-1, para. 9-1; OMB Cir. A-34; DoD Manual 7220.9-M, ch. 24, para. B.3.a.(1).

D. Budget Authority.

1. Congress finances federal programs and activities by granting "budget authority." Budget authority is also called obligational authority.

2. Budget authority means ". . . authority provided by law to enter into obligations which will result in immediate or future outlay involving government funds . . . ." 2 U.S.C. * 622(2).

a. Examples of "budget authority" include appropriations, borrowing authority, contract authority, and spending authority from offsetting collections. OMB Cir. A-34 (Dec. 1995), * 11.2.

b. "Contract Authority," as noted above, is a limited form of "budget authority." Contract authority permits agencies to obligate funds in advance of appropriations but not to pay or disburse those funds absent some additional appropriations authority. See, e.g., 41 U.S.C. * 11 (Feed and Forage Act).

3. Agencies do not receive cash from appropriated funds to pay for services or supplies. Instead they receive the authority to obligate a specified amount.

E. Authorization Act.

1. An authorization act is a statute, passed annually by Congress that authorizes the appropriation of funds for programs and activities.

2. An authorization act does not provide budget authority. That authority stems from an appropriations act.

3. Authorization acts frequently contain restrictions or limitations on the obligation of appropriated funds.

F. Appropriations Act.

1. An appropriations act is the most common form of budget authority.

2. An appropriation is a statutory authorization "incur obligations and make payments out of the U. …

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