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Staff Summary of Testimony to the PCSCB: Financial Executives Institute

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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.

President's Commission to Study Capital Budgeting

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