Overlooked by many during the debate over raising the debt ceiling is the upcoming deadline to fund Fiscal Year 2012 (FY 2012), which begins on October 1. In April, Congress passed a continuing resolution (CR) to fund government operations for the remainder of FY 2011. At the time of passage, a shut down of the government seemed like a very real possibility and a CR was not reached until $38 billion in cuts in discretionary spending was found.

When Congress returns in September, we expect a similar, though not quite as contentious, debate over funding for FY 2012. The Debt Reduction package agreed to earlier this month put into place a more generous spending amount than had earlier been agreed to by the House. Republican leaders may have their work cut out for them in order to convince some of the more ardent budget hawks in the House to allow for that additional funding to be used.

There are twelve (12) separate appropriations bills and it is unlikely that all will be signed into law before the October 1 deadline, necessitating some sort of CR that most likely will allow the government to continue operating at FY 2011 levels. To date, the House has passed six of 12 funding bills, while the Senate has only completed one (the Military Construction bill). It is still to be determined whether the disparities in spending priorities between the House and Senate will lead the Congress into another 11th hour battle requiring a short term CR that includes spending cuts similar to the process used for this year’s budget.