Budget crisis

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A budget crisis is an informal name for a situation in which the legislative and the executive in a presidential system deadlock and are unable to pass a budget. In presidential systems, the legislature has the power to pass a budget, but the executive often has a veto in which there are insufficient votes in the legislature to override. If no emergency provisions are made for the government's budget, a budget crisis may develop into a government shutdown in which the government temporarily suspends non-essential services until a budget is passed.

Unlike parliamentary systems, where a loss of supply would trigger the immediate fall of the government, a budget crisis can often lead to an extended stand-off. At the federal level in the United States, a crisis can often be averted by a continuing resolution which appropriates funding at the same level as the previous budget.

A budget crisis can also occur if the legislative branch has a constitutionally mandated dissolution or suspension date and the budget hasn't been passed up to that point. The term "budget crisis" could be used for situation where the executive branch freezes certain funds (impoundment) despite the directions of the law on annual budget already passed by parliament.

Politically, a budget crisis may develop in a situation of disagreement between state and civil society. Constitutional economics is a field of economics and constitutionalism which describes and analyzes the specific interrelationships between constitutional issues and functioning of the economy including budget process. The standards of constitutional economics when used during annual budget planning, as well as the latter's transparency to the society, are of the primary guiding importance to the implementation of the rule of law. Also, the availability of an effective court system, to be used by the civil society in situations of unfair government spending and executive impoundment of any previously authorized appropriations, becomes a key element for the success of any influential civil society.