A CBO PAPER: The Budgetary Treatment of Leases and Public/Private Ventures
CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
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Federal agencies sometimes use long-term leases and special-purpose publicprivate ventures to acquire capital assets without having to obtain Congressional appropriations for the full costs up front. Depending on their budgetary treatment, such leases and publicprivate ventures can allow an agency to pay for an asset over time. In the case of a lease, the asset is paid for incrementally, through annual lease payments. In the case of a publicprivate venture, the asset is paid for over time through the prices the agency pays for the goods and services that it agrees to purchase from the venture or through a lower return on the equity or other valuable considerations that the agency contributes to the venture. In both cases, the financing technique obscures the full costs of the asset. In contrast, if the agency purchased the asset directly, the full costs would appear up front in its budget.
- Economics and Cost Analysis