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Staff Summary of Testimony to the PCSCB: Financial Executives Institute
Financial Executives Institute: Proposal on Federal Capital
Asset Budgeting
Summary: James J. Abel advocated this proposal on behalf of Federal
Executives Institute (FEI) when he testified before the Commission on May
8, 1998. FEI presented this proposal to the House Government Reform and
Oversight Committee in May 1995.
The proposal has several major requirements.
An on-budget Capital Asset Fund (CAF) would be created and administered
by the Department of the Treasury for each Federal agency's capital expenditures
over an established threshold.
CAFs would be provided authority to borrow in authorizations and/or appropriations
acts from the Treasury for amounts necessary to completely fund new capital
investments.
The fund would repay the Treasury as funds are received from agency debtors
and would not be revolving.
The budget authority for the full cost of capital assets would be scored
upfront and outlays would be scored as they are made for asset acquisitions.
This is generally the current practice.
The unified budget would contain three categories: (1) total budget authority
and expenditures for capital assets for the year in the CAF account; (2)
the operating budget for the year (the total of all agency operating budgets);
and (3) the CAF receipt account as an offset account. Thus, the unified
budget totals for budget authority and outlays for the year would be the
sum of the three categories and should be the same as under the current
system.
While separating the capital and operating budget to assist decisionmakers,
the total cash obligation of the current unified budget would be retained.
There would be no distortion of the actual cash budget deficit and its
impact on Federal borrowing.