Summary

Budget estimates seldom reflect actual year-end results. However, accurate budget projections are important to achieving fiscal responsibility in the federal government. Identifying and understanding recurring variations between estimates and results can help future budget decisions and deficit cutting. This report compares the Office of Management and Budget's original and revised estimates of the deficit, receipts, outlays, and economic assumption with the actual fiscal year 1994 results. This is the fourth in a series of annual reports that identifies large differences between budget estimates and actual results and highlights the factors that have led to these differences. It is also the third year in which GAO has examined account-level budget estimates. This report has the additional objective of looking at the trends in estimates for receipts, outlays, and economic assumptions during fiscal years 1991-94.

GAO found that: (1) the FY 1994 budget deficit was $60.9 billion lower than OMB estimated, mainly as a result of better-than-expected economic performance; (2) OMB estimates were similar to those of the Congressional Budget Office and the Blue Chip consensus of forecasters; (3) the FY 1994 economy was stronger than predicted because the Gross Domestic Product grew faster than expected and unemployment was lower than expected; (4) lower-than-estimated receipts from individual income and social insurance taxes were partially offset by higher-than-expected corporate income tax receipts; (5) although budget outlays were $54.4 billion less than the President's budget estimate, no single activity accounted for the difference in outlays; and (6) revolving funds presented perennial estimating problems, partly due to financial management problems and the overall nature of revolving funds.