The federal government starts its new fiscal year on Oct. 1. No doubt Congress will be late with at least some of its spending bills — that’s become a tradition — but even if lawmakers were right on time, the federal budget would arrive three months after most states’. This timing discrepancy is due to a couple of presidents: John Tyler and Richard Nixon.
A half-century after the ratification of the Constitution, President Tyler signed a bill that set the fiscal year to run from July 1 to June 30. Some historians believe this new schedule helped with planning around seasonal changes in revenue.
The fiscal year moved again in 1974, following a fight between the legislative and executive branches. President Nixon refused to spend money appropriated by Congress for programs he opposed. In response, Congress passed a law preventing presidents from replacing its funding decisions with their own.
It also created a formal process for Congress to develop and enforce its budgeting priorities, including the budget reconciliation process that was used to pass July’s One Big Beautiful Bill.
The 1974 law gave Congress an additional three months to reach consensus on a budget, by pushing the start of the fiscal year from July 1 to Oct. 1, where it’s remained ever since.
But 46 states continue to budget on a July through June cycle, mirroring the old federal schedule. The exceptions are Alabama, Michigan, New York and Texas, along with Washington, D.C. Most states, however, finalize their budgets in late spring, whether they go into effect on July 1 or at a later date, says Brian Sigritz, of the National Association of State Budget Officers.
In most years, states can make a pretty good guess about how much federal aid they’ll receive by the time the congressional budget process is finally through. This year may prove an exception. If there are more cuts to come from Washington, states will already be well into their fiscal years by the time they have to adjust.
