Fact Sheet on Senate Budget Process: 98-325 GOV

The Federal Fiscal Year

Bill Heniff Jr., Consultant in American National Government
Government and Finance Division
Updated February 25, 1999

The fiscal year is the accounting period of the federal government. It begins on October 1 and ends on September 30 of the next calendar year. Each fiscal year is identified by the calendar year in which it ends and commonly is referred to as "FY." For example, FY1998 began October 1, 1997, and ends September 30, 1998.

Initially, the federal fiscal year coincided with the calendar year. In 1842, President John Tyler signed legislation changing the fiscal year to a July 1 to June 30 cycle. Beginning with FY1977, the Congressional Budget Act of 1974 (Section 501 of P.L. 93-344, currently codified at 31 U.S.C. 1102) changed the fiscal year to its current cycle. In both instances, the intent was to provide Congress with more time to process appropriations legislation, particularly to avoid continuing resolutions. Establishing the most appropriate budget cycle continues to be the subject of some legislative proposals that would change the current fiscal year to a biennial (two-year) period.

Federal agencies simultaneously work on three fiscal-year budgets at any given time. Figure 1 illustrates these three fiscal-year budgets. First, agencies implement budgetary legislation for the current fiscal year. Second, they support the President's budget proposals during congressional consideration of budgetary legislation for the coming fiscal year, referred to as the "budget year." Third, federal agencies plan their budgets for the following fiscal year, which the President will submit to Congress in February of the next calendar year. For example, in April 1998, agencies were implementing the FY1998 budget, seeking funds for the FY1999 budget, and planning for the FY2000 budget.