The federal fiscal year begins on October 1st and goes through September 30th. We are currently in FY23, which began in October 2022 and will end in a few weeks.
But why? What's the deal with starting our fiscal year in October? I'm glad you asked. Here's the answer.
- For our first 50 years, we used a normal calendar year. There was no such thing as a budget back then, just appropriations that were passed whenever an agency happened to request one. So nobody really cared very much about when the official accounting year started.
- In 1842 the fiscal year was changed to begin on July 1st. Nobody knows why. One account says it was done for the "convenience of the public service," which obviously doesn't tell us anything. Why was it more convenient? Another theory says it had something to do with seasonal fluctuations in revenue. Or maybe it was a middle finger to President John Tyler, though it's hard to see why he'd care. (And he signed the bill making the change.)
- In 1974, the fiscal year was changed to its current structure (effective in 1976). By this time Congress did pass budgets, which were getting bigger and more complex all the time. They were never able to finish by July 1st, so they moved the start of the fiscal year to October 1st. This gave them three more months to pass a budget.
Today, of course, Congress is unable to finish a budget even by October 1st. Maybe it's time to come full circle and go back to a calendar year, which would give Congress until January 1st to finish up?
Or maybe it doesn't matter. The president, after all, releases a detailed budget document by March every year. It's hardly impossible. The real problem isn't so much size and complexity, but partisanship. Congress spends all year fighting over the budget and refusing to broker a deal until the very last second. If the fiscal year started on January 1st, it would just allow them three more months of brinkmanship and grandstanding and it would require them to hang around through the holidays. We might as well just leave things as they are.
I was working in the Federal government when the switch from July 1 to October 1 was made, and the reason for it I heard most often was that too many people were on vacation in the middle of the summer, so they wanted to move it to the fall when most people were back at work.
Yes, I also worked for my Uncle then, and I remember it as you do.
And BTW, that's why they can't complete the transition all the way back to the calendar year. HUGELY too much interference from the Holiday Season. Parties, absenteeism, and worst of all, people taking use-it-or-lose-it vacation time.
Agreed. And everyone who's ever worked for any govt. knows December is the worst possible time of year to get anything done, except maybe to announce a job you've got a particular person in mind for.
As IT support staff in California supporting both state-funded (July-June fiscal year) and federally-funded (October-September fiscal year) projects, the pain is real. The July-September period represents the transitionary period where the State Fiscal Year is different from the Federal Fiscal Year.
I was in the Army when back in (I think) 1990 when they moved the pay date from the 15th and last day of the month to the 1st and 15th of the month. Moving it from Sept. 30th to October 1st (the next fiscal year) gave the Department of Defense a one-time savings of millions of dollars.
I recall reports at the time that the shift to October 1 was done so that they could hide a big chunk of the deficit in the 3 months not-in-any-budget-year interregnum period.
That's conspiratorial baloney. It was because of the need to get it out of the summer vacation period.
IIRC it was part of a package of budget reforms, most notably the "reconciliation" process. Not only was Congress taking too long to consider and pass individual appropriations bills, but there was no process to look at the budget as a whole. The reconciliation process was intended to force Congress to consider the overall tax and spend situation and provide caps to the appropriations subcommittees within which to appropriate.
(Based on my memory, which is faulty, there wasn't much concern about vacations in August, except perhaps for the fact if Congress missed the July 1 deadline for appropriations, we got into the limbo of no appropriations, which would require Congress to stick around DC in August to fix the problem.
The "vacation problem" relating to the July 1 start to the new FY was that as soon as schools let out around Memorial Day, a LOT of the working-level civil servants in the DC area liked to take off for either the beaches or the mountains with their families. Department heads found it impossible to do all the last-minute paperwork that accompanies the "horse trading" of dollars, priorities, and commitment dates for a bazillion programs.
The October 1 deadline for that activity was a lot easier to meet, since the families with kids in school were "back to normal" after Labor Day.
"They were never able to finish by July 1st, so they moved the start of the fiscal year to October 1st."
They shoulda defined the fiscal year as being 15 months long. Problem solved! Duh.
And we will name the three extra months:
"Ronaldus"
"Donaldus"
and
"Mitchus"
Most companies also have 10/1 as the start of their fiscal year. It sometimes gets confusing if you're trying to match Q[n] fiscal to Q[m] calendar.