Budget Process Reform

Federal Capital Revolving Fund

The proposal to create a Federal Capital Revolving Fund (FCRF) would reform the method by which the Federal Government finances capital projects. Unlike State and local governments, the Federal Government does not separate capital spending from operating expenses. They make decisions on capital projects using a separate capital budget. At the Federal level, though, capital projects are not separated and instead are funded in the same group of accounts as operating expenses.

Federal operating expenses are generally funded through annually enacted “discretionary spending while long-term commitments are considered “direct spending“. These different forms of spending are subject to different budget enforcement procedures. The FCRF proposal uses this division of spending to form a kind of capital budget for expensive federally-owned capital assets within the current Federal budget structure.

This proposal, which is part of the President’s Fiscal Year 2020 Budget Submission,  has been set forth in legislative text and was transmitted to the Congress by the Director of the Office of Management and Budget Mick Mulvaney on June 12, 2018. The idea primarily changes the method of scoring future capital budgeting projects, and while imaginative, might lack the fundamental change the purchase of capital assets requires. It further blurs the distinction between direct spending and discretionary spending, which is already a problem.

See the following for this text:

Full Legislative Text of the Federal Capital Revolving Fund Act of 2018

Table of Contents

Section 1. Short Title.

Sec. 2. Findings and Purpose.

(a) Findings
(b) Purpose

Sec. 3. Definitions.

(a) Administrator
(b) Agency

(c) Director

(d) Discretionary Appropriations and Direct Spending 

(e) Federal Facility

(f) Fund

(g) Project

(h) Purchase Transfer

(i) Purchasing Agency

Sec. 4. Establishment of Federal Capital Revolving Fund.

(a) Administration of Fund
(b) Permissible Uses

(c) Prior Approval of Purchase Transfers

(d) Purchase Transfer Limit

(e) Higher Project Cost

(f) Annual Limitation on Total Purchase Transfers

(g) Excess Purchase Transfer Amounts
(h) Payment of One-time Administrative Fee

Sec. 5. Funding.

(a) Appropriation To Fund
(b) Authorization of Appropriations

(c) Availability of Fund

Sec. 6. Repayments by Purchasing Agencies.

(a) Requirement To Repay Fund
(b) Repayment Period

(c) Repayment Amount

(d) Disposition of Project

(e) Change in Need for or Condition of Asset

Sec. 7. Transfers Between Fund and Purchasing Agencies.

(a) Expenditure Transfers
(b) Availability and Purpose

(c) Return of Unused Purchase Transfer Amounts

(d) Establishing New Accounts

Sec. 8. Budget Enforcement.

(a) Direct Spending
(b) Discretionary Appropriations

(c) Changes To Fund Balance

(d) Failure to Appropriate Repayments

(e) Transfers and Reprogramming

Sec. 9. Requirements For Projects To Be Held in the GSA Inventory.

(a) Approved Projects

Sec. 10. Sequestration.


Budget Process Reform (Main)


Sec. 1 (FCRF)

[BCR §009]