Order Code RL33134
CRS Report for Congress
Received through the CRS Web
Supplemental Appropriations:
Trends and Budgetary Impacts Since 1981
November 2, 2005
Thomas L. Hungerford
Specialist in Public Sector Economics
Government and Finance Division
Congressional Research Service { The Library of Congress

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Supplemental Appropriations: Trends and Budgetary
Impacts Since 1981
Summary
Hurricane Katrina, which struck Louisiana, Mississippi, and Alabama, caused
widespread flooding, significant property damage, and lost lives. In response,
Congress passed two supplemental appropriations measures providing a combined
$62.3 billion for relief and recovery needs. Many knowledgeable observers think that
the costs will likely rise much higher. Some have called for offsets in the federal
budget to pay for Katrina (and, to a lesser extent, Hurricane Rita) relief and recovery
efforts. Recently, many in Congress have expressed renewed concern about the
impact of supplemental appropriations on the federal budget deficit and federal debt.
Supplemental appropriations provide additional funding to an agency during the
course of a fiscal year for programs and activities that are considered too urgent to
wait until next year’s budget. The major purposes of supplemental appropriations
have changed over the past 25 years. In the 1980s, almost half of supplemental
appropriations were for mandatory programs such as unemployment compensation,
and the rest were for discretionary spending. After 1990, over 90% of supplemental
appropriations have been for discretionary spending, as the major purpose has shifted
toward funding natural disaster relief.
The amount of new budget authority contained in supplemental appropriations
bills fell after 1981 from over 3% of total budget authority to only about 0.1% by
1988. Except for a sharp spike in 1991 to fund the first Gulf war, supplemental
appropriations remained at less than 1% of total budget authority throughout most of
the 1990s. Supplemental appropriations began to rise after 1998, and by 2005
reached about 6% of budget authority. In addition to hurricane relief, FY2005
supplemental appropriations provided funding for the wars in Iraq and Afghanistan,
tsunami relief, and the global war on terror.
Since FY1981, an average of 36% of the supplemental appropriations were
offset by rescissions. After FY2002, however, less than 0.5% of the supplemental
appropriations were offset through rescissions. It has been argued, however, that the
offsetting rescissions were merely write-offs of budget authority that would never be
used. For example, CBO estimated that in the 1980s, nearly half of the rescinded
funds were unlikely to ever have been spent.
Supplemental appropriations net of rescissions have usually increased the
budget deficit, and federal debt held by the public is larger than it would have been
had the supplemental appropriations been fully offset. Had supplemental
appropriations been fully offset since 1981, federal debt held by the public could
have been reduced by about 18% or $830 billion. This could have reduced interest
payments to the public by $35 billion per year. On the other hand, if 25% of the
supplemental appropriations in FY2003 through FY2005 had been offset (the average
offset for previous years), federal debt held by the public would have been reduced
by over 1% or almost $65 billion. Presently, reducing federal debt by $65 billion
could save about $2 billion annually in interest payments to the public. This report
may be updated if events warrant.

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Contents
Budget Rules and Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . 2
General Trend in Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Budget Controls and Rescissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budgetary Impacts of Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . 7
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
List of Figures
Figure 1. Supplemental Appropriations as a Percentage
of Budget Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
List of Tables
Table 1. Supplemental Appropriations and Rescissions . . . . . . . . . . . . . . . . . . . . 6
Table 2. Effect of Supplemental Appropriations Net of Rescissions on
Budget Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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Supplemental Appropriations: Trends and
Budgetary Impacts Since 1981
Hurricane Katrina, which struck Louisiana, Mississippi, and Alabama, caused
widespread flooding, significant property damage, and lost lives. In response,
Congress passed two supplemental appropriation measures providing a combined
$62.3 billion for relief and recovery needs. It is thought by many knowledgeable
observers that the costs will likely rise much higher. Some have called for offsets in
the federal budget to pay for the Katrina (and Hurricane Rita) relief and recovery
efforts. Including the supplementals for Hurricane Katrina, total supplemental
appropriations of FY2005 were $160.4 billion which is about 6% of the total budget
authority for FY2005.1 Supplemental appropriations often receive less scrutiny than
the budget for the upcoming fiscal year as is reflected by the fact that the time from
introduction to enactment is typically quite short. For the five FY2005 supplemental
appropriations acts, the time from introduction to enactment varied from less than
one day to three months.2
A supplemental appropriation is a device to provide additional funds for a fiscal
year already underway, and has been used since the second session of the first
Congress. However, concern has been expressed over the volume of appropriations
made through supplementals. Although supplemental appropriations are usually used
to fund emergency spending, Congress has nevertheless attempted to control
supplementals. Besides efforts to limit supplemental appropriations to “dire”
emergencies, Congress has tried to mitigate the effects of supplementals with
offsetting rescissions. Since 2003, however, less than 1% of supplemental
appropriations have been offset.
Recently, many in Congress have expressed renewed concern about the impact
of these supplemental appropriations on the federal budget deficit and federal debt.
In 2001, the federal budget ran a surplus equal to 1.3% of gross domestic product
(GDP). Three years later, the federal budget was in deficit as outlays increased
somewhat and receipts fell. The budget deficit was equal to 3.6% of GDP in 2004
and 2005 budget deficit was about 2.6% of GDP ($319 billion). Furthermore, federal
1 See Congressional Budget Office, CBO data on Supplemental Budget Authority for the
2000s, at [http://www.cbo.gov/ftpdocs/66xx/doc6630/SuppApprop.pdf], visited Sept. 19,
2005.
2 The Emergency Supplemental Appropriations Act to Meet Immediate Needs Arising from
the Consequences of Hurricane Katrina, 2005 (P.L. 109-61) was introduced and enacted on
Sept. 2, 2005. The Military Construction Appropriations and Emergency Hurricane
Supplemental Appropriations Act, 2005 (P.L. 108-324) was introduced on July 15, 2004,
and enacted on Oct. 13, 2004.

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debt as a percentage of GDP increased from 33% to over 37% between 2001 and
2005.
This report examines supplemental appropriations since 1981. The trends in,
and the budget rules and laws applicable to supplemental appropriations are briefly
reviewed. In addition, the impact of supplemental appropriations on budget deficits
and federal debt is estimated. The report does not focus on the reasons why
supplemental appropriations have followed a particular trend (although some reasons
are offered), but rather focuses on the budgetary impacts of supplemental
appropriations.
Budget Rules and Supplemental Appropriations
Supplemental appropriations provide additional funding to an agency during the
course of a fiscal year for programs and activities that are considered too urgent to
wait until next year’s budget. They often include spending for items authorized after
the annual regular appropriations process. Over the past 25 years, Congress and the
President have enacted one to eight supplemental appropriations or rescissions each
year.
The major purposes of supplemental appropriations have changed over the past
25 years. In the 1980s, almost half of supplemental appropriations were for
mandatory programs such as unemployment compensation, and the rest was for
discretionary spending. One large discretionary item in supplemental appropriation
during this time was civilian pay raises. The purposes of supplemental
appropriations shifted dramatically in the 1990s toward funding natural disaster relief
as agencies were required to absorb the full amounts of pay raises.3 After 1990, over
90% of supplemental appropriations were for discretionary spending.
The President is authorized to “submit to Congress proposed deficiency and
supplemental appropriations the President decides are necessary because of laws
enacted after submission of the budget or that are in the public interest.”4
Supplemental appropriations, however, are generally discouraged. For example, the
Office of Management and Budget (OMB) directs agencies to “make every effort to
postpone actions that require supplemental appropriations.”5 OMB further states that
it “will only consider requests for supplementals and amendments when:
! Existing law requires payments within the fiscal year (e.g., pensions
and entitlements);
! An unforeseen emergency situation occurs (e.g., natural disaster
requiring expenditures for the preservation of life or property);
! New legislation enacted after the submission of the annual budget
requires additional funds within the fiscal year;
! Increased workload is uncontrollable except by statutory change; or
3 Congressional Budget Office, Supplemental Appropriations in the 1990s, Mar. 2001.
4 31 U.S.C. §1107.
5 Office of Management and Budget, Circular A-11 (June 2005), p. 1 of section 110.

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! Liability accrues under the law and it is in the Government’s interest
to liquidate the liability as soon as possible (e.g., claims on which
interest is payable.”6
Supplemental appropriation bills often contain funding requests for several
purposes with varying levels of urgency. For example, the Emergency Supplemental
Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005
(P.L. 109-13) provided $76.2 billion for additional defense spending, $5.8 billion for
additional non-defense spending and $1.5 billion in rescissions which permanently
cancel budget authority. Included in the bill were emergency supplemental
appropriations for the National Oceanic and Atmospheric Administration, the Public
Health and Social Services Emergency fund, and the Office of Federal Housing
Enterprise Oversight, among others.
Supplemental and regular appropriations have been subject to a variety of
budgetary rules over the years.7 Prior to 2003, the Budget Enforcement Act of 1990
(BEA) set discretionary spending caps and a pay-as-you-go (PAYGO) requirement
for mandatory spending. The BEA was revised and extended throughout the 1990s
and the limits expired at the end of FY2002. Before 1990, the Balanced Budget and
Emergency Deficit Control Act of 1985 set a deficit target and established a
sequestration process to enforce the targets.8 In addition, the 1987 and 1989 budget
summits focused on reducing the deficit by limiting the amounts Congress could
appropriate.
Spending determined to be for an emergency by both the President and Congress
has been effectively exempt from the deficit targets, budget caps, and PAYGO
requirements. However, at one point in the negotiations during the 1989 budget
summit, negotiators discussed limiting supplemental appropriations by requiring all
additional discretionary spending be offset. Unable to reach agreement on new
language, the final agreement left intact the exemption for supplemental
appropriations in the case of emergencies from the 1987 Budget Summit.9 Many
times the emergency designation has proven controversial, and some lawmakers have
been concerned that the emergency spending exemption has been used mainly to
evade BEA’s constraints rather than respond to unanticipated needs.10
6 Circular A-11 (June 2005), p. 1 of section 110.
7 See CRS Report 98-721, Introduction to the Federal Budget Process, by Robert Keith and
Allen Schick; and CRS Report RS21035, Emergency Spending: Statutory and
Congressional Rules, by James V. Saturno.
8 Sequestrations are automatic, largely across-the-board spending reductions to bring
projected budget levels in line with statutory targets. See CRS Report RS20398, Budget
Sequesters: A Brief Review, by Robert Keith.
9 William G. Dauster, “Budget Emergencies,” Journal of Legislation, vol. 18, no. 2, (1992),
pp. 249-315.
10 Congressional Budget Office, Emergency Spending under the Budget Enforcement Act,
Dec. 1998.

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General Trend in Supplemental Appropriations
Since 1981, supplemental appropriations have varied from $1.3 billion to $161.9
billion which corresponds to 0.1% to over 6% of total budget authority (see the solid
line in Figure 1).11 The amount of new budget authority contained in supplemental
appropriations bills fell after 1981 from over 3% of total budget authority to 0.1% in
1988. The early 1980s were characterized by high inflation and then a severe
recession. The double digit inflation of 1980 and 1981 led the Federal Reserve Board
to adopt a tight monetary policy to reduce inflation. This policy action contributed
to the severe 1981-1982 recession. Both the high inflation and the recession led to
greater than expected outlays as the price increases made programs more expensive
to administer and the recession increased outlays for unemployment compensation
and means-tested transfers to the unemployed. Some of the unexpected spending was
funded through supplemental appropriations. As the economy recovered after 1982,
the need to meet unanticipated outlays was removed, and supplemental
appropriations fell. CBO argued that provisions in the Congressional Budget Act of
1974 also contributed to the reduction in supplemental appropriations in the late
1970s and early 1980s.12
11 Budget authority provides the federal government authority to enter into obligations.
Outlays or the spending of the money occurs when obligations are liquidated. New budget
authority in one year may not result in outlays in the same year. For example, of the $2,568
billion that the administration proposed for FY2006 outlays, $2,053 billion would result
from recommended new budget authority and $514 billion would results from budget
authority enacted in prior years. See Budget of the United States Government, Fiscal Year
2006, Analytical Perspectives, Feb. 7, 2005, chart 26-1, p. 418.
12 Congressional Budget Office, Supplemental Appropriations in the 1980s, Feb. 1990.

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Figure 1. Supplemental Appropriations as a Percentage
of Budget Authority
7%
6%
5%
Supplementals
4%
3%
2%
Percent
1%
0%
Supplementals
-1%
Net of Rescissions
-2%
1981
1984
1987
1990
1993
1996
1999
2002
2005
Fiscal Year
The brief decline in 1988 may have been due to the 1987 budget summit
between Congress and the President where it was agreed that supplemental
appropriations would not be considered except for dire emergencies. Except for a
sharp spike in 1991 to fund the first Gulf war, supplemental appropriations remained
at less than 1% of total budget authority throughout most of the 1990s. Much of the
incremental cost for the first Gulf War operations was eventually offset over the
1990s by burden-sharing contributions from allied nations.
After 1998, supplemental appropriations began to rise as the federal budget
began running surpluses. After 2002, much of the supplemental appropriations was
for funding the wars in Iraq and Afghanistan, and the war on terrorism. By 2005,
supplemental appropriations reached about 6% of budget authority.
Budget Controls and Rescissions
The enactment of rescissions, to some extent, reduced the budgetary effect of
supplemental appropriations. The dashed line in Figure 1 shows the supplemental
appropriations net of rescissions as a percentage of budget authority. The level of
rescissions in supplemental appropriations has varied from year to year, with
particularly large rescissions in FY1981, FY1986, and FY1995. In FY1995, enacted
rescissions totaled $18.9 billion, while supplemental appropriations amounted to $6.4
billion. Since FY1981, an average of 36% of the supplemental appropriations were

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offset by rescissions. If the three years with large rescissions are omitted, then about
25% of the supplemental appropriations have been offset, on average.
Deficit reduction has been of great concern since the early 1980s. The large
deficits of the early 1980s prompted Congress to enact deficit target legislation in
1985. In 1990, the focus shifted from budget deficits, per se, to establishing
discretionary spending limits and mandatory spending PAYGO requirements. These
limits expired at the end of FY2002. Table 1 reports supplemental appropriations
and rescissions for the following four periods:
! FY1981-FY1985, the period before the enactment of the deficit
targets, but covered by provisions of the Congressional Budget Act
of 1974 which required the President’s budget submission to include
allowances for emergencies;
! FY1986-FY1990, the period covered by the deficit targets under the
Balanced Budget and Emergency Deficit Control Act of 1985, and
the 1987 and 1989 budget summit agreements;
! FY1991-FY2002, the period covered by BEA’s discretionary limits
and PAYGO requirements; and
! FY2003-FY2005, the period after the BEA limits expired.
Table 1. Supplemental Appropriations and Rescissions
(billions of dollars)
Percent of
Percent of
Supplemental
Total
Supplemental
Total
Appropriation
Fiscal Years
Supplemental
Appropriation
Rescissions
Rescinded
Appropriations
Rescinded
(present
(nominal)
value)
1981-1985
$103.3
$23.2
22.4%
25.5%
1986-1990
$38.6
$15.7
40.7%
43.5%
1991-2002
$206.6
$55.2
26.7%
27.0%
2003-2005
$360.8
$1.6
0.4%
0.4%
Source: CRS calculations based on CBO and OMB data.
For each of the four periods, Table 1 shows the total amount of supplemental
appropriations and rescissions. For the FY1981-FY1985 period, 22% (25% in
present value terms) of supplemental appropriations were offset through rescissions.13
Over the period covered by the deficit targets (FY1986-1990), over 40% of the
supplemental appropriations were offset. During the FY1991-FY2002 period, about
13 The level of supplemental appropriations and rescissions varies from year to year. The
present value calculation takes into account inflation and the time value of money using the
interest rate on five-year U.S. government bonds.

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CRS-7
one quarter of the supplemental appropriations were offset. After FY2002, however,
less than five tenths of 1% of the supplemental appropriations were offset through
rescissions. It has been argued that the offsetting rescissions were merely write-offs
of budget authority that would never be used. For example, CBO estimates that in
the 1980s, nearly half of the rescinded funds were unlikely to ever have been spent.14
Budgetary Impacts of Supplemental Appropriations
Table 2 reports the estimated percentage increase in the budget deficit as a
result of not offsetting the full amount of supplemental appropriations.15 Over the
entire FY1981-FY2005 period, the annual budget deficits were about 8% larger than
would have been the case if the entire supplemental appropriation were offset by
budget reductions or revenue increases. Over the FY1981-FY1985 period,
supplemental appropriations net of rescissions increased the budget deficit by about
8% per year. Over the FY1986-FY1990 period, the supplementals increased the
annual budget deficits by less than 4%. After the expiration of the discretionary
limits and PAYGO requirements at the end of FY2002, supplemental appropriations
net of rescissions increased the budget deficit by almost 25% per year.
Table 2. Effect of Supplemental Appropriations Net of
Rescissions on Budget Deficit
Estimated Average annual increase in
Fiscal Years
budget deficit or decrease in budget
surplus
1981-1985
7.6%
1986-1990
3.5%
1991-2002
5.3%
2003-2005
23.8%
1981-2005
7.6%
Source: CRS calculations based on CBO and OMB data.
14 Congressional Budget Office, Supplemental Appropriations in the 1980s, Feb. 1990.
15 Supplemental appropriations may not necessarily result in outlays in the same fiscal year
in which they are enacted. Based on CBO data for the 1990s, it is estimated that about
30.5% of supplemental appropriations resulted in outlays in the same fiscal year, 56.1% in
the next fiscal year, and the remaining 13.4% in subsequent fiscal years. These percentages
are used for estimating the impact of the outlays associated with supplemental
appropriations on the budget deficit. To the extent that the rescissions just cancelled budget
authority that never would have been spent, the estimates could understate the actual impact
on budget deficits.

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Supplemental appropriations have been fully offset in only one year since
FY1980. In FY1995, supplemental appropriations amounted to $6.4 billion while
the new Congress rescinded about $18 billion in budget authority. Consequently,
supplemental appropriations net of rescissions have usually increased the budget
deficit and federal debt held by the public is larger than it would have been had the
supplemental appropriations been fully offset. Had supplemental appropriations been
fully offset since 1981, federal debt held by the public could have been reduced by
about 18% or $830 billion. This could have reduced interest payments to the public
by $35 billion per year. On the other hand, if 25% of the supplemental
appropriations in FY2003 through FY2005 had been offset (the average offset for
previous years), federal debt held by the public would have been reduced by over 1%
or almost $65 billion. Presently, reducing federal debt by $65 billion could save
about $2 billion annually in interest payments to the public.
Conclusions
Reacting to disasters and other emergencies often requires high levels of
funding. The required funding cannot be anticipated and the length of the funding
commitment is difficult to determine in advance. In adopting budget rules and laws
to control supplemental appropriations, Congress and the President have in the past
provided a “safety valve” for emergencies. Spending that is deemed an emergency
was effectively exempt from discretionary limits and PAYGO requirements.
However, what constitutes an emergency has not been without controversy.16
Funding for most emergencies has come through supplemental appropriations.
While most of the funds from a supplemental appropriation are directed toward
addressing the stated emergency, funding for other purposes with varying levels of
urgency are often included. Prior to 2003, varying amounts of supplemental
appropriations were offset by reductions in other spending or increases in revenues.
Between 1981 and 2002, about a quarter of supplemental appropriations were offset
through rescissions. However, since the expiration at the end of FY2002 of the
discretionary limits and PAYGO requirements, less than five tenths of 1% of
supplemental appropriations have been offset.
Even with the rescissions, supplemental appropriations have generally increased
the budget deficit and federal debt held by the public. Had all supplemental
appropriations since 1981 been offset, publicly held federal debt would have been
about 10% lower at the end of FY2005. Furthermore, if just 25% of supplemental
appropriations in FY2003-FY2005 had been offset, federal debt held by the public
would have been 1% lower.
16 See CRS Report RL31478, Federal Budget Process Reform: Analysis of Five Reform
Issues, by James V. Saturno and Bill Heniff, and Congressional Budget Office, Emergency
Spending under the Budget Enforcement Act, Dec. 1998 for a discussion on budgeting for
emergencies and a review of reform options.

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