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So, I understand that many organizations have fiscal years that differ from calendar years, but why? What is the logic in starting a fiscal year three months early, especially considering how long its been since the U.S. Congress has been able to actually, you know, pass a budget?

  • Shouldn't this be on actuarial.SE? :) – user4012 Sep 30 '13 at 13:38
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    I think you mean later, not earlier. The president proposes a budget in February, and Congress drafts a proposal in April. They have until Sept 30 to pass a bill and have it signed by the president. Moving it from July 1 to Oct 1 actually gives Congress's 3 more months. – user1873 Sep 30 '13 at 13:51
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    @user1873 - i think he meant "early" as in "vs calendar year" – user4012 Sep 30 '13 at 13:59
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The U.S. federal government's fiscal year begins on 1 October of the previous calendar year and ends on 30 September of the year with which it is numbered. Prior to 1976, the fiscal year began on 1 July and ended on 30 June. The Congressional Budget and Impoundment Control Act of 1974 stipulated the change to allow Congress more time to arrive at a budget each year, and provided for what is known as the "transitional quarter" from 1 July 1976 to 30 September 1976. (Wikipedia).

Also:

The first fiscal year for the U.S. Government started Jan. 1, 1789. Congress changed the beginning of the fiscal year from Jan. 1 to Jul. 1 in 1842, and finally from Jul. 1 to Oct. 1 in 1977 where it remains today. (src: http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm)

The Federal fiscal year gives elected Congressmen, who begin office in January, time to participate in the budget process for the next fiscal year. In other words, if the fiscal year was the calendar year, the country would run for an entire year on a budget voted on by PREVIOUS Congress - which is precisely what we are edging towards anyway given the 1976 2 month shift and your note about budget "tardiness" of late.

I am tempted to also speculate that original July 1 fiscal year may have been due to seasonality of revenues (which is how some seasonal businesses decide on their fiscal calendar - they start the year after the seasonal income spike, thus they know what their yearly budget is clearer), but without decent historical research this is just idle speculation.

  • Might consult Tyler or Thomas Ewing (Treasurer) since the fiscal year changed from Jan 1 to July 1 under his administration. These two changes (1974 CBaICA) to the fiscal year are the only ones I have heard of. I was researching my own answer, but this one seems adaquate. – user1873 Sep 30 '13 at 13:58
  • @user1873 - he mentioned the change in State of the Union, but didn't explain why: ". By the act of 1842 a new arrangement of the fiscal year was made, so that it should commence on the 1st day of July in each year. " – user4012 Sep 30 '13 at 15:26

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