A Thought on Federal Revenues

In my 7 years of experience in the military we seemed to spend more money during the fourth quarter of each fiscal year Aug - October than just about all the other quarters combined.

This is a result of the way DoD budgets work. At the beginning of the year, we get a budget based off what we spent the previous year so we try to balance our spending throughout the year.

Generally some things got cancelled or were just slow in Q1 and Q2 due to winter holidays, the new year, cold weather, etc so we were usually a bit under budget in the March time frame.

We would meet, adjust our budget and plan to spend more the rest of the year. This was key, because if we spent less than the year before, we would get less money for next year’s budget.

Then sometime between Apri - May, we would find out we just got a bunch of extra money so not only did we need to spend our remaining budget, but we also needed to spend this new money so we would get more money next time there was extra.

End result - we bought all of our wish list items that we didn’t think we’d be able to buy between Aug - October.

This is not meant to be a political post, I know that system sounds broken and wasteful. We also tried to do the right thing and buy what we needed, but I’m sure we could have been more efficient.

The point is, I’m expecting to see increasing federal/DoD revenue for our company’s that have public sector facing businesses when they report next.

This could lead to some nice revenue surprises especially in light of the recent sell offs.

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I worked in a public school system many years ago and this is exactly the way it worked there too. You end up spending a lot of $$ later in the year on things you don’t really need b/c you’ll “lose” the $$ for that year and also get a lower budget next year if you don’t.

Yes, this could generate a bump for companies that sell to DoD (or other govt. agencies) – not sure if there’s a way to see this for prior years to gauge how big tho.

The Dog

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I’ve worked for the government for 30 years.

What you say is certainly generally true… spending increases in the 4th quarter.

It’s a bit more complicated these days though. First, we are almost always operating under “Continuing Resolutions”… It’s honestly been more of the norm to be operating under CR than to have an actual budget.

The reason this is important to understand is that DoD gets their budget approved more easily than the rest of the government. The rest of the government get “lumpy” funding months and sometimes weeks at a time. For example, for Fiscal 2019… we have no approved budget and are operating under a CR until December. In December, we will likely get yet another CR. Rinse and repeat.

That cycle makes it impossible to execute programs and make budgets. It’s a general nightmare. This result of all the CR’s is that 4th isn’t what it used to be.

My opinion
M

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