Biennial budgeting is a two-year appropriations cycle in which a state legislature authorizes all government spending for the coming twenty-four months at once rather than passing a new budget every year. Nineteen states use this approach; the other thirty-one states and the federal government run on annual cycles. The tradeoff is straightforward: agencies and lawmakers get a longer planning window and more time for oversight, but forecasting revenue and spending two years out is harder than doing it one year at a time.
Which States Budget on a Two-Year Cycle
As of 2026, the nineteen biennial budget states are Connecticut, Hawaii, Indiana, Kentucky, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oregon, Texas, Virginia, Washington, Wisconsin, and Wyoming.1National Conference of State Legislatures. FY 2026 State Budget Status Most begin their fiscal biennium on July 1 of odd-numbered years, though start dates and legislative calendars vary.
The lineup has shifted over time. More than a dozen states dropped biennial budgeting between the late 1960s and 1980s, most often citing the difficulty of making accurate two-year forecasts. Some states have moved in both directions: Connecticut switched to annual in 1971 and returned to biennial in 1991; Iowa moved to annual, back to biennial, and then settled on annual for good in 1983. The choice usually turns on how often a state’s legislature meets and how volatile its revenue sources are.
How the Two-Year Cycle Is Built
Not all biennial budgets are structured the same way. Under a consolidated model, the legislature passes a single appropriation covering the full twenty-four months, and agencies manage one lump authorization across both years. The more common alternative is the split-biennial model, where the legislature passes two separate one-year appropriations at the same time.2Congressional Budget Office. Biennial Budgeting Each year has its own limits, and the second year’s figures can differ from the first to reflect expected cost or priority changes. Either way, the legislature does the heavy appropriations work once every two years rather than every year.
Preparation begins roughly eight to nine months before the new biennium starts. State agencies build revenue forecasts drawing on economic projections, tax collection trends, and expected federal funding. Each agency then submits a formal budget request to a central budget office, detailing anticipated costs for personnel, operations, equipment, and capital projects. Requests generally include historical spending data from prior biennia to justify future allocations. In Ohio, for example, the governor’s submission must include comparative figures from each of the previous two biennia alongside the new request.3Ohio Legislative Service Commission. Ohio Revised Code 107.03
The hard part of agency preparation is accounting for inflation and program changes across a full two-year window. Agencies that lowball their estimates risk running short in the second year; agencies that pad numbers invite scrutiny from budget analysts.
Once the executive branch finalizes the proposal, appropriations and finance committees hold hearings where agency heads defend their requests. Committee members can question assumptions and propose changes before the bill moves to the full chamber.4U.S. House Committee on the Budget. Stages of the Budget Process After both chambers pass the bill, it goes to the governor. Governors in forty-four states have line-item veto authority, and that power carries extra weight in a biennial context because any veto affects two full years of funding rather than one.
Handling Surprises in the Off Year
No two-year forecast is perfect, so every biennial state builds in some mechanism for correcting course. The most common tool is a supplemental appropriation, where the legislature authorizes additional spending to address needs that weren’t anticipated when the original budget passed.5U.S. Government Accountability Office. Supplemental Appropriations: Opportunities Exist to Increase Transparency and Provide Additional Controls Natural disasters, economic downturns, and unexpected spikes in program enrollment are typical triggers. Most biennial states give the governor authority to call a special legislative session for fiscal emergencies, and some build automatic review points into the off year so first-year revenue surprises can be reflected in second-year spending without scrapping the entire plan.
Roughly thirty-five states prohibit carrying a deficit forward, and biennial states are no exception. Meeting a balanced budget requirement over twenty-four months instead of twelve adds complexity. States sometimes manage compliance by shifting the timing of payments, pushing a payroll or aid payment from the last month of one fiscal year into the first month of the next. The technique satisfies the legal requirement while leaving actual resources and obligations somewhat out of alignment.
Reserve funds, commonly called rainy day funds, matter more in biennial states because the longer horizon increases exposure to economic shocks. Several biennial states tie deposits directly to the two-year cycle. Texas transfers half of any unencumbered general revenue balance to its Economic Stabilization Fund at the end of each biennium. Washington requires three-fourths of any extraordinary revenue growth to be deposited into its Budget Stabilization Account by the end of the second fiscal year. North Dakota transfers general fund surpluses above a set threshold at the close of each biennium.6National Conference of State Legislatures. Rainy Day Funds: A State-by-State Overview
Withdrawal rules follow the same logic. Oregon allows appropriations from its reserve funds when the quarterly revenue forecast for the current biennium shows general fund revenues will fall at least three percent below current appropriations. Nevada permits transfers from its stabilization account when actual revenue falls five percent or more below anticipated revenue for the biennium. Build deposits around good biennia, authorize withdrawals when a biennium turns bad.
Why States Choose It, and Why Some Have Dropped It
The strongest argument for biennial budgeting is that it frees legislative time. When a legislature doesn’t have to pass an entirely new spending plan every year, members can devote more attention to evaluating whether existing programs work. Agency officials spend less time preparing budget justifications and more on financial management and program analysis.7U.S. Government Accountability Office. Biennial Budgeting: Potential for Greater Budgetary Focus Agencies also get greater funding certainty, since they know their appropriation for two full years rather than operating under the threat of a delayed annual budget.
The case against centers on forecasting. Projecting revenues eighteen months into the future is already hard; a biennial cycle can require projections up to thirty months out. The longer the horizon, the greater the chance that economic conditions will render the budget’s assumptions obsolete.8Congressional Research Service. Biennial Budgeting: Issues, Options, and Congressional Actions When that happens, the legislature either gives the executive branch more latitude to reallocate funds on its own or engages in mid-cycle corrections that eat into the time savings the system was supposed to create. Critics also note that fewer scheduled budget votes means fewer opportunities for legislators to influence agency spending, which can shift power toward the governor’s office. States that don’t handle mid-cycle adjustments well tend to be the ones that eventually abandon the cycle altogether.
Is the Federal Government on a Biennial Budget?
No. The federal government uses an annual appropriations cycle, and no proposal to move it to a two-year cycle has been enacted. Congress has debated the switch for decades. The most recent major proposal, the Biennial Budgeting and Appropriations Act (S.3208), was introduced in the Senate in November 2023 and would require Congress to pass appropriations every two years instead of annually, designating the second year for oversight.9Congress.gov. S.3208 – Biennial Budgeting and Appropriations Act
Supporters argue that the annual cycle forces Congress into repetitive votes that crowd out program evaluation. The GAO has noted that if off-year adjustments were handled like supplemental appropriations rather than full budget rewrites, the time savings for both Congress and federal agencies could be significant. Opponents counter that the federal budget is far larger and more complex than any state’s, making accurate two-year forecasts even harder. The Department of Defense’s experience with a biennial experiment is often cited as a cautionary example: the agency ended up preparing second-year budget justifications twice, creating more work rather than less. The theoretical benefits depend on Congress actually using the freed-up time productively, and that’s a behavioral assumption no statute can guarantee.