What happens when Congress fails to pass a formal federal appropriations bill, and/or the President fails to sign it into law by October 1st? (We ask “when” rather than “if” because this has happened every year since FY 2000.) In order to avoid a government shutdown, Congress passes a joint resolution—known as a “continuing resolution”—that authorizes government agencies to fund existing programs at current or reduced levels, until either the resolution expires or an appropriations bill is passed. A continuing resolution must be passed by both houses of Congress and signed into law by the President. Protracted budget negotiations in recent years have resulted in the passage of a series of continuing resolutions for each fiscal year. In fact, for more than a year—between September 2010 and December 2011—most federal agencies were operating from one continuing resolution to another, without firm annual budgets. For FY 2001 alone, a total of 21 continuing resolutions were passed.
If a continuing resolution is not passed, the government’s non-essential functions must cease, as federal agencies are no longer be allowed to spend money. Non-essential government workers are furloughed and non-essential services suspended. According to a Congressional Research Service Report, six such partial government shutdowns occurred between FY 1977 and FY 1980, ranging from eight to 17 days. From FY 1981 to FY 1995, nine shutdowns occurred, each lasting no longer than three days.
Many of us remember the most recent shutdowns, which took place when a standoff between President Bill Clinton and Congressional Republicans over the FY 1996 budget resulted in two separate shutdowns; from November 14 through November 19, 1995, and from December 16, 1995 to January 6, 1996, for a total of 28 days (this second, 21-day, shutdown was the longest in U.S. history).
While a continuing resolution allows the government to keep functioning and gives it additional time to make tough fiscal decisions, it also creates headaches for federal agencies, many of which are forced to interrupt existing programs because of reduced funding and/or put new programs—and leasing decisions—on hold because the funding for them has not yet been appropriated.