Why Does the Fiscal Year Start on October 1?

Why does the federal fiscal year start on October 1? It wasn’t always that way.

Senior Fellow Matthew Dickerson walks through the history of the federal fiscal calendar and what it says about Congress and its budget deadlines.

When the first Congress met in 1789, the government budgeted on a calendar year, January through December. But the House and Senate usually gaveled in to start their sessions in December, just weeks before the appropriations deadline, so funding was often enacted months after the year had begun.

In 1842, Congress moved the start of the fiscal year to July 1, which gave it an extra six months of session to consider appropriations. That calendar lasted more than 130 years, and Congress still failed to enact appropriations on time.

The Congressional Budget Act of 1974 pushed the start date back another three months, to October 1. The idea was to give Congress more time to review the President’s budget request, authorize programs, and pass the appropriations bills. The change took effect with fiscal year 1977.

It didn’t solve the problem. In the 50 years since, Congress has completed all of its regular appropriations bills by the start of the fiscal year only four times.

In this video:

• Why the government started out on a calendar-year budget
• The 1842 shift to a July 1 fiscal year
• How the Congressional Budget Act of 1974 set the October 1 start date
• Why Congress has met the deadline only four times since

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