Zero-based budgeting for agencies

Summary#

This bill would require federal agencies to build and submit “zero-based” budgets every sixth year. A zero-based budget means agency managers must review objectives, operations, and costs, consider alternatives, and rank programs by importance. Agencies must send these budgets to the Office of Management and Budget (OMB) and to the House and Senate budget committees.
The bill also requires each agency, except the Department of Defense and the National Nuclear Security Administration, to recommend program cuts that total at least a 2% reduction in discretionary spending from the previous year.

• Main change: Agencies must prepare a zero-based budget for the next fiscal year and the following four years every six years.
• Cut requirement: Except for DoD and NNSA, agencies must propose program reductions equal to at least a 2% cut in discretionary appropriations from the prior year.
• Recipients: Budgets go to the OMB and both chambers’ budget committees.
• Definition provided: The bill defines zero-based budgeting as examining objectives, operations, costs, alternatives, and ranking programs by importance.
• What is unclear: The bill does not explain how Congress would use the cut recommendations, how compliance would be checked, or what counts as sufficient program reductions.

What it means for you#

• Federal agencies and managers

  • Must conduct a full review of programs, costs, and priorities every sixth year.
  • Must produce a five-year budget plan based on that review.
  • Except for DoD and NNSA, must identify programs to cut to reach at least a 2% discretionary-spending reduction.

• Congress (budget committees)

  • Will receive zero-based budgets and agencies’ cut recommendations for review.
  • The bill does not require Congress to adopt the recommended cuts.

• Programs funded by discretionary appropriations

  • Some programs may be recommended for reduction or elimination to meet the 2% target.
  • The bill does not itself change current funding levels; it requires agencies to propose reductions.

• Taxpayers / general public

  • This could mean agencies report more detailed reviews of why programs exist and how costly they are.
  • Any actual spending cuts would depend on subsequent congressional action.

Expenses#

No publicly available information.

• The bill does not include a fiscal note or cost estimate in the supplied material.
• Likely administrative costs (inference): Preparing zero-based budgets and program reviews could require more staff time, data collection, and analysis within agencies. This could raise agency workload and administrative expenses.
• Possible downstream savings or costs (unclear): The bill requires cut recommendations but does not estimate net savings or costs to the government if Congress adopts, ignores, or modifies those recommendations.
• Enforcement or oversight costs are not specified.

Proponents' View#

• The bill appears intended to make agency budgeting more transparent and rigorous by forcing full program reviews.
• Supporters may argue this could help prioritize spending and identify programs that can be reduced or eliminated.
• Requiring agencies to suggest at least a 2% discretionary cut could be seen as a mechanism to encourage lower spending growth.
• The six-year cycle may be presented as a balanced schedule to allow regular but not annual deep reviews.

Opponents' View#

• One concern is the added workload and cost: zero-based reviews can be time-consuming and may require new staff or consultants, raising agency administrative costs.
• The bill does not explain how the 2% recommended cuts would be enforced, implemented, or judged adequate, leaving uncertainty about actual impact on spending.
• Requiring uniform percentage reductions may pressure agencies to recommend cuts that harm effective programs rather than targeting low-value activities.
• Exempting the Department of Defense and NNSA from the cut-recommendation rule could raise questions about consistency across agencies.
• It is unclear how agencies should handle programs with legally mandated funding or multi-year commitments when preparing cuts.