Backgrounder: What is a Reserve Fund? An optional component of a Budget Resolution, which was used heavily in the Fiscal Year 2008 Budget Resolution, is called a “reserve fund.” These are provisions that allow total spending and committee allocations to be adjusted upward to accommodate additional spending for a specifically defined purpose. The adjustment of spending levels is dependent on one or more contingencies, typically that (1) the additional spending will be “deficit neutral” and (2) that the covered legislation is dedicated to specific objectives. Because most reserve funds require that the new legislation be “deficit neutral” (paid for by new spending cuts or tax increases), the use of the term reserve fund is actually a misnomer, since a Budget Resolution “reserve fund” does not provide any funds.In fact, the only scenarios in which a “reserve fund” has any purpose at all (other than to make a political statement) is where a mechanism is needed to allow the Budget Committees to adjust spending totals and/or committee allocations to accommodate a new program that is to be paid for by tax increases, or by spending cuts in another committee’s jurisdiction. If a new program is paid for by spending cuts within a committee’s own jurisdiction, there is no net increase in the committee’s spending or in total Federal spending, so no adjustments to the Budget Resolution are required and “reserve fund” authority is unnecessary.
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| Charles S. Konigsberg, President | (703) 351-5048 (ph) | (703) 351-6218 (fax) | ckonigsberg@federalbudgetgroup.com | |
