Budget Issues:

Incremental Funding of Capital Asset Acquisitions

GAO-01-432R: Published: Feb 26, 2001. Publicly Released: Feb 26, 2001.

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This report identifies civilian nondefense agency capital projects with estimated costs of $175.6 billion, based on agency budget justifications and other data. Costs for incrementally funded and high technology civilian projects are estimated at $154.7 billion. Of this amount, $78.5 billion in budget authority has been provided through fiscal year 2000, leaving $76.2 billion of budget authority still required after fiscal year 2000 to complete these projects, a requirement that constitutes a claim on discretionary spending in future years. About half of the $154.7 billion is for high technology projects. Because some capital projects have unknown funding requirements beyond the fiscal year 2001 request, the remaining budget authority needed to complete all projects exceeds the $76.2 billion identified and assumes no further cost growth. This budget authority relates only to civilian projects. Department of Defense spending for capital acquisitions is generally fully funded; its fiscal year 1999 capital spending totaled almost $53 billion. If the Navy shipbuilding and conversion account were to be moved from full to incremental funding for a given period of time, this would not allow the Navy to procure more ships for a given amount of funding. In general, full funding ensures that the full estimated costs of decisions are recognized at the time that the commitment is made. Incremental funding erodes future fiscal flexibility for programs such as shipbuilding because funding is dedicated to completing procurements begun in previous years.

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