Supplementals provide additional budget authority for government activities for the fiscal year already in progress, over and above any funding provided in regular appropriations laws, continuing resolutions, or omnibus appropriations. The President may also submit to Congress proposed supplemental appropriations the President decides are necessary because of laws enacted after the submission of the budget or that are in the public interest. Within a single supplemental appropriations law, some funds may be designated as emergency and others may not. Emergency-designated funds do not have to compete for scarce resources that are constrained by budget controls. Figure 1 shows the amount of supplemental gross budget authority (i.e., before rescissions) from fiscal year 1981 through fiscal year 2007. Although our review focused on supplementals enacted from fiscal year 1997 through fiscal year 2006, we included data from fiscal year 1981 through fiscal year 2007 in this figure to provide context. From fiscal year 1981 through fiscal year 1999, fiscal year 1991’s nearly $50 billion stands out even in the absence of a consistent pattern. Most of the $48.6 billion in supplemental appropriations provided that year was for the Gulf War. From fiscal year 2000 through fiscal year 2005, however, the amount grew steadily to a peak of over $160 billion. The amount in 2006 declined to just over $128 billion. For fiscal year 2007, just over $120 billion in supplemental gross budget authority was appropriated. As we previously noted, not all emergency funding is provided through supplementals. CBO has noted that until 1999 virtually all emergency- designated funds were provided as emergency-designated supplemental budget authority in response to natural disasters or international crises. But in the 1999 omnibus appropriation act more than $21 billion in appropriations were designated as emergencies. That number rose to $31 billion in 2000. This change illustrates two points of significance to this study: (1) a change in the way the emergency designation is used and (2) the fact that emergency funding can be provided through legislative acts other than supplementals. Although this report focuses on supplementals and so does not look at emergency-designated funds in regular appropriations, their existence emphasizes the fact that the decision on whether to use supplementals and the decisions regarding the emergency designation are separate. From fiscal years 1991 through 2002, appropriations were governed by the provisions of the Budget Enforcement Act of 1990 (BEA), which Congress and the President adopted in November 1990 as part of a multiyear budget agreement. The BEA established statutory limits on discretionary spending coupled with a “pay-as-you-go” (PAYGO) requirement designed to ensure that new legislation affecting mandatory spending or tax revenues did not increase the deficit. The discretionary spending limits applied to both budget authority and outlays. If the discretionary appropriations enacted for a given year caused any of the caps to be exceeded, the President had to order a sequestration of funds in the category of spending in which the breach occurred. The BEA did recognize that there would be emergencies for which Congress and the President would want to provide funds over and above the amounts envisioned in the discretionary spending caps and provided a kind of “safety valve.” If a provision was designated as “emergency” by both the President and Congress, the discretionary spending caps were raised for both the budget authority and outlays associated with the emergency spending (this is sometimes referred to as being exempted from the caps). Thus, supplemental appropriations designated as emergency spending did not cause a breach of the caps, did not trigger a sequestration, and were not required to be offset with a rescission. In addition, BEA treated all incremental costs associated with Operation Desert Shield as if they were designated emergency without requiring further action by Congress and the President. Under the BEA, nonemergency supplementals were subject to the discretionary spending caps. If a nonemergency supplemental under consideration by either the House or the Senate would have exceeded the amount allocated to the applicable budget function under the budget resolution, the supplemental was subject to a point of order. In practice, however, such points of order generally were not raised. In some cases, supplemental appropriations have been protected with waivers of the points of order in both the House and the Senate. Although most budget enforcement mechanisms expired in fiscal year 2002, Congress generally has included overall limits on discretionary spending and exemptions for emergency-designated funding in its Budget Resolutions. In addition, the Budget Resolutions for fiscal years 2005 and 2006 provided exemptions for all appropriations related to overseas contingency operations for the Global War on Terrorism. As figure 1 showed, the use of supplementals has increased over the last several years. Over the 10-year period from fiscal year 1997 through fiscal year 2006, 25 supplemental appropriations laws were enacted providing about $612 billion ($557 billion net of rescissions) in new gross budget authority. In contrast, during the 10 years immediately preceding this period, $126 billion in gross budget authority ($86 billion provided net of rescissions) was provided in 39 supplemental appropriations acts. The majority of the supplemental funds provided from fiscal years 1997 through 2006 received an emergency designation. Ninety-five percent of the total supplemental funds were appropriated to 11 departments, with the DOD receiving nearly 60 percent of the total (see fig. 2 for the distribution). In comparison, just over 14 percent of the total was appropriated to the Department of Homeland Security (DHS), with other departments receiving 5 percent or less of the total supplemental funds. Factoring in rescissions during the same time period shows that DOD received the most supplemental funds on both a gross and net basis. Ten percent of the total funds rescinded through supplementals over this 10-year period were rescinded from DOD. In contrast, 43 percent of the funds rescinded through supplementals were rescinded from DHS. When the emergency-designated provisions were analyzed by the type of emergency prompting the need for the supplemental, not surprisingly, defense-related emergencies received over 50 percent of the funds. As figure 3 shows, during fiscal years 1997–2006 the vast majority of supplemental appropriations were emergency designated— over $511 billion of the $612 billion in gross supplemental budget authority. Fiscal year 2003 stands out with a large amount of funds that were not emergency designated, primarily targeted to war-related efforts. The lack of emergency designation for these funds could have been the result of the close timing between the supplemental request and the introduction of the fiscal year 2004 Budget Resolution. The Budget Resolution was written to allow for the war-related supplemental. Supplemental funding for similar activities was emergency designated in later years. Although funds that are not emergency designated do not receive any special budgetary treatment, they may receive less scrutiny than appropriations made during the regular budget process. As shown in figure 4, more than 50 percent ($270 billion) of the emergency-designated supplemental funds were appropriated for defense- related activities. In comparison, 28 percent was directed to respond to natural or economic disasters and 16 percent went to antiterror, security, and post-9/11 activities. International humanitarian assistance, pandemic influenza, and other activities comprised 3 percent of the total emergency- designated supplemental funds provided over the 10-year period we studied. Our analysis indicates that there are a number of issues to be addressed if the use of supplementals is to be limited to needs identified after the beginning of the fiscal year. Although Congress has specified criteria for the emergency designation in Budget Resolutions, these criteria are not self-executing and there are limited screening and enforcement processes. In our review of emergency-designated supplementals, we found provisions that were not clearly consistent with these criteria as well as provisions that did not contain sufficient information for us to make a determination. We also found that provisions in supplemental appropriations were not always related to the emergency events that may have prompted the supplemental, which raises questions about the potential use of supplementals to fund items that could have been included in the regular budget and appropriations process. In addition, we found that a number of accounts are regularly funded through supplementals, which may indicate that they are being funded through supplementals in lieu of the regular budget and appropriations process. Finally, we found that over one-third of the supplemental appropriations enacted were available until expended (referred to as “no-year” funds). Such funds provide agencies with great flexibility but do not prompt the annual or periodic Congressional review and reconsideration typical of funds that are available for a limited amount of time. The term “emergency” is not defined in budget process law. However, in a 1991 report to Congress, the Office of Management and Budget (OMB) proposed what it described as a neutral definition of “emergency requirement,” and Congress has included this definition in its Budget Resolutions. The definition requires that for something to qualify as an “emergency” all five of the following criteria must be met: a necessary expenditure (an essential or vital expenditure, not one that is merely useful or beneficial); sudden (coming into being quickly, not building up over time); urgent (a pressing and compelling need requiring immediate action); unforeseen (not predictable or seen beforehand as a coming need, although an emergency that is part of an overall level of anticipated emergencies, particularly when estimated in advance, would not be “unforeseen”); and not permanent (the need is temporary in nature). These emergency criteria, modified slightly, have appeared in several proposed budget process reform bills. Although none of the proposed reform bills have been enacted, Congress incorporated the emergency criteria into its Concurrent Budget Resolution in years 2004, 2005, and 2006. In 2003, there was no Concurrent Budget Resolution. We interpreted the continued appearance of the criteria as a statement of Congress’ general acceptance of the definition. Critics of the use of the emergency designation cite numerous examples of funding designated as emergency that they believe meet none of the criteria listed above.