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Appropriations

VIEWS: 4 PAGES: 64

  • pg 1
									    September 20 and 22, 2011


1
            General Principles
    •Home Rule? Nope.
    •All power comes from legislature.
    •Find a law that allows action, either
    express or necessarily implied.
    •Not enough to say “no law says we
    can’t do it.”
      •Girard v. Allenstown, 121 N.H. 268 (1981).

2
           General Principles
    •RSA Chapter 32
    •Applies to all towns, school districts
    and village districts adopting budget at
    annual meeting (including SB 2)
    •SB 2 towns, also see RSA 40:13.
    •Towns with charters – add those
    provisions, too.
3
           General Principles
    •Purpose of Budget Law:
      • Uniformity in the manner of
        appropriating and spending public
        funds … including those towns,
        school districts and village
        districts which do not operate with
        budget committees. RSA 32:1
4
           General Principles
    •Violators may be removed from
    office, RSA 32:12
      • Petition to superior court
      • Budget committee or any interested
        person may initiate
      • Removal is not automatic
    •DRA can disallow appropriations
    made in violation of budget law
5
           General Principles
    •Legislative body = town meeting,
    school district meeting, village district
    meeting

    •Governing body = board of
    selectmen, school board, village
    district commissioners
6
           General Principles
    •Budget Committees:
      • Not required
      • “Official” = adopted by legislative
        body under RSA 32:14
      • “Advisory” = unofficial,
        established by Selectmen or
        legislative body but not under
        RSA 32:14
7
    SB 2 (Official Ballot Referendum)
    •2 sessions for meetings, dates differ from
    traditional meeting dates
    •First session (“deliberative”), voters
    discuss and amend articles
    •Second session – voting and elections
      • Vote on articles as set by first session
      • Ballot vote only, no discussion or
        amendment

8
          SB 2 – Default Budget
    Amount of prior year’s appropriations,
    increased or decreased by:
      • Debt service, contracts, mandated
        expenditures
      • One-time expenditures
      “Operating budget” in this case
       does not include individual
       warrant articles.
9
            SB 2 – Default Budget
     •Essentially, a budget freeze
       • Except for legally enforceable
         obligations and one-time expenditures.
     •Amount of $ from previous year, not
     the amount needed for same items or
     services in the coming year (i.e., fuel).
     •No new purposes, either.

10
           SB 2 – Default Budget
     •Prepared by governing body/budget
     committee, disclosed at budget
     hearing, posted w/budget and warrant
     •Voters may not amend
     •Preparer may amend at any time
     before ballots are printed, acting on
     new relevant information
11
           SB 2 – Default Budget
     •Failed operating budget: governing
     body may call one special meeting
     without court permission on revised
     operating budget

     •Otherwise, default budget takes effect

     •Transfer authority applies to it
12
         7 Key Budget Concepts
     •Appropriations
     •Gross Basis Budgeting
     •Warrant Notice and Amendments
     •No Spending Without an Appropriation
     •Lapse of Appropriations
     •Transfer of Appropriations
     •10% Limitation
13
              Appropriations
     •Key Concept #1
     •Legislative body policy decision,
     vote to spend an amount of money for
     a specified purpose
     •Authorization to spend money; not
     the actual spending of money


14
              Appropriations
     •“Raise” = identify the source of funds
     •“Appropriate” = set apart a certain
     sum for a specified purpose
     •“Purpose” = goal or aim to be
     accomplished through expenditure of
     public funds, RSA 32:3, V
     •Not limited to MS-6 or MS-7 form
15
               Appropriations
     •“Proper Public Purpose”
       • Towns: RSA 31:4 – any public purpose
         not prohibited by N.H. Constitution or
         by any law
       • School districts: RSA 198:4, limited to
         support of public schools
       • Village districts: RSA 52:1, purposes
         for which established
16
               Appropriations
     •What are “proper public purposes”?

     •“Public benefit”?
     •General benefit to the public still
     might not count
     •Implied authority to appropriate


17
               Appropriations
     •Incidental private benefit may be legal
        • Main purpose: public welfare
        • Quid pro quo
        • Obligation to benefit municipality
     •No reimbursement for purely private
     benefit
        • Plowing private roads or driveways

18
               Appropriations
     •How specific should articles be?
     •Voters set policy but may want to leave
     governing body flexibility re: details
     •Too specific - may not be able to act
       • “New truck” instead of “truck”
     •Always state specific amount

19
              Appropriations
     •Contingency Funds?
       • Cities may, but towns may not.
       • RSA 44:10-a (cities)
     •“Sinking Funds”?
       • Nope.
       • RSA 33:2, cannot bond solely to pay
         indebtedness.

20
                 Appropriations
     •Procedural Requirements:
       •   Public budget hearing
       •   Disclosure of all purposes and amounts
       •   Gross basis budgeting
       •   Recommendations
       •   Warrant notice
       •   List appropriations on posted budget

21
              Appropriations
     •Public budget hearing
       • First hearing at least 25 days before
         traditional March meeting (3d Tues.
         in Jan. for March SB 2)
       • Held by official budget committee;
         selectmen, if no budget committee
       • At least 7 days’ notice

22
               Appropriations
     •Public budget hearing
       • All purposes “discussed or disclosed”
         at a public hearing, whether raised by
         committee, selectmen or public
       • New purposes may be raised at a
         hearing
       • SB 2 – default budget disclosed at
         public hearing, RSA 40:13, XI(a)
23
             Appropriations
     •Public budget hearing
       • After close of hearing, no new
         purpose or amount may be added
         without another hearing.
          • No increased amounts
          • No new subject matter


24
               Appropriations
     •Public hearing requirement applies to
     petitioned $ articles
     •Schedule at least one hearing after
     petitioned article deadline
     •Budget Committee finalizes budget
     after close of last public hearing, at a
     public meeting.
25
              Appropriations
     •When is the budget due?
       • posting of budget (at least 14 days
         before meeting), or
       • forwarding of budget from budget
         committee to board of selectmen
         (at least 20 days before meeting)
         RSA 32:16
26
              Appropriations

     •Posting of warrant and budget
       • 14 days before meeting (last
         Monday in January for SB 2)
       • Include all appropriations
       • DRA will invalidate any not listed
       • Post default budget (SB 2)
27
              Appropriations
     •Collective Bargaining Agreements (CBA)
       • Disclose cost items by “submission
         date” (petitioned article deadline)
       • ‘Cost item’ – any benefit acquired
         through collective bargaining whose
         implementation requires an
         appropriation


28
                Appropriations
     •CBA, continued…
       • If cost items aren’t agreed on by
         submission date, need special meeting
          • ‘Emergency’ court permission required
       • If original article is defeated, special
         meeting required for revised cost items
          • No court permission if authorization part
            of original warrant (RSA 31:5, III)

29
         Gross Basis Budgeting
     •Key Concept #2

     •Budget must show anticipated
     revenue from all sources (estimates?)
     •Revenues not shown cannot be spent
     •Include total amount in “raise and
     appropriate” clause, then break into
     different revenue sources
30
           Gross Basis Budgeting
     “To see if the town will vote to raise and
     appropriate $60,000 to renovate the town garage
     and to authorize the withdrawal of $45,000 from
     the capital reserve fund created for this purpose;
     and further to combine this with the surplus in the
     highway department’s budget from last year and
     to authorize the selectmen to apply for a matching
     amount in federal stimulus funds.”
31
           Gross Basis Budgeting
     “To see if the Town will establish a committee
     to advertise for and obtain sealed bids from
     contractors for the replacement of the Bridge
     Street Bridge; this project to be funded in next
     year’s budget.”
        • Amended at meeting, change last phrase
          to “and to appropriate $150,000 for
          initial project costs.”
32
          Gross Basis Budgeting
     •Special Warrant Articles
     •Defined – RSA 32:3, VI
       • Petitioned appropriations articles
       • Bond issues
       • $ into capital reserve or trust funds
       • Designated “special” or “non-lapsing”
         or “non-transferable”
       • Recommendation(s) required
33
          Gross Basis Budgeting
     •Recommendations
       • Optional: Numeric tally of
         recommendations printed in warrant, if
         authorized by voters or governing body
       • Special and separate appropriations articles
       • “Budget Committee recommends by vote of
         9 to 2; Board of Selectmen does not
         recommend by vote of 3 to 2.”


34
        Notice and Amendments
     •Key Concept #3

     •Appropriation valid only if subject
     matter appears in warrant (RSA 32:6)
     •New purposes/line items cannot be
     added from the floor of the meeting
     •Whether traditional or SB 2
35
         Notice and Amendments
     •Voters may amend from the floor
     (traditional & 1st session of SB 2)
     •Line items and separate articles
     •Selectmen’s, budget committee’s budget is
     advisory only
     •Voters can’t restrict later transfers


36
         Notice and Amendments
     •Alter mode of funding, generally okay
     •However - DRA has disallowed as failure
     to warn of subject matter:
       • Appropriation to CRF, amended to
         accomplish purpose this fiscal year
       • Amendment to name CRF agents to expend
     •“Stay at Home” test

37
         Notice and Amendments
     •Traditional meeting – voters can “table”

     •SB 2 – deliberative session cannot delete
     article entirely, must be presented to voters
     in some form (cannot “to see”)

     •No amendment to eliminate or change
     subject matter of article, but may amend $$
38
              Special Meetings
     •Same procedural requirements as annual
     meeting (see Appx. B)

     •Official budget committee involvement

     •Public hearing on budget w/notice
       •‘Disclose or discuss’ all purposes, amounts


39
             Special Meetings
     •No appropriations of money unless:
       •50% of voters or court permission
       •‘Emergency’ required
       •Factors considered, RSA 31:5, I(b)(c)
         •Severity of harm
         •Urgency of need
         •Foreseeable
         •Alternatives not requiring appropriation?
40
              Special Meetings
     •Special Meetings – ARRA, other federal
     programs enacted through 2011 (Appx. C)
        •Legislation allows special meetings
        without court permission for “appropriate
        response” to special federal funds
        •Streamlined process for meeting
        •No other subject matter may be acted on

41
     No Spending w/o Appropriation
     •Key Concept #4

     •No spending unless that amount was
     appropriated for that purpose
     (RSA 32:8)
       • Town meeting vote
       • Includes non-tax revenue

42
     No Spending w/o Appropriation
     •Exceptions to the Rule
       • Transfers by governing body
       • Legal judgments ordered by a
         court
       • DRA permission to overspend
         bottom line or add appropriation
       • Prior mandate of federal/state
         government
43
     No Spending w/o Appropriation
     •More Exceptions
       • Prior contract requiring spending
         more than appropriated
       • Spending Jan. 1 until town
         meeting, RSA 32:13, II
         (reasonable in light of prior year,
         same purposes)
44
     No Spending w/o Appropriation
     •Yet More Exceptions
     •Unanticipated revenue (RSA 31:95-b)
     •Capital Reserve and Trust Funds
     •Other Funds
       • Conservation Fund, Heritage Fund,
         Recreation Revolving Fund
       • Water and Sewer Reserves
       • Revolving Funds (RSA 31:95-h)
45
     No Spending w/o Appropriation
     •Out of money? What now?
       • Transfer funds from one appropriation
         to another, RSA 32:10
       • Ask DRA for permission to overspend
         the budget
       • Special meeting (court permission)
       • RSA 31:95-b – BOS authority to apply
         for, accept and spend unanticipated
46
         funds
     No Spending w/o Appropriation
     •Multi-year contracts
     •Collective bargaining agreements
       • Need to “Sanbornize”
     •Multi-year equipment leases
       • Without escape/nonappropriation clause it is
         considered long-term debt, RSA 33:7-e
     •Other multi-year contracts
       • Governing body recommends, voters
         approve
47
         Lapse of Appropriations
     •Key Concept #5
     •Authority to spend lapses at year’s end
        • Year’s end = fiscal year end
     •Unspent money goes into fund balance
        • Must be appropriated again, or
        • Used to reduce following year’s tax rate, or
        • Retained
     •School Districts don’t have fund balance

48
           Lapse of Appropriations

     •What is fund balance?
     •Not “surplus” cash or slush fund
     •Net amount of
       •   Unexpended appropriations, plus
       •   Excess revenues received; less
       •   Uncollected taxes and
       •   Liabilities

49
        Lapse of Appropriations
     •How to Use Fund Balance:
       • Retain some for cash flow and emergency
         expenditures (RSA 32:11, requires DRA
         permission)
       • Source of funds for future appropriations
     •Retained Fund Balance
       • 5 to 15% of regular general fund operating
         revenues; or 8 to 17% of regular general
         fund operating expenditures
50
         Lapse of Appropriations
     •Exceptions to Lapse Rule
       • Encumbered funds (contracted obligations
         or special warrant article – very different)
       • Bonds
       • Anticipated grants (RSA 32:7, IV)
       • Capital Reserve Funds (RSA Chapter 35)
       • Town-Funded Trust Funds (RSA 31:19-a)
       • Special Revenue Funds (RSA 31:95-c, d)
       • Revolving Fund (RSA 31:95-h)
51
           Lapse of Appropriations

     •Other Non-Lapsing Funds

       •   Conservation Fund – RSA 36-A:4
       •   Sewer Fund – RSA 149-I:10 and 35:7
       •   Water Fund – RSA 38:29 and 35:7
       •   Impact Fees – RSA 674:21, V
       •   Recreation Revolving Fund – RSA 35-B:2

52
       Transfer of Appropriations
     •Key Concept #6
     •Governing body may transfer from
     one ‘purpose’ to another, RSA 32:10
     •Not out of special warrant articles
     •Public record must be kept
     •Cannot overspend the bottom line
     •Line item voting – very limited
53
       Transfer of Appropriations
     •Sullivan v. Hampton, 153 N.H. 690 (2006)

       • Affirms governing body’s ‘unfettered’
         authority to transfer
       • Applies to ordinary operating budget
         or default budget
       • No limit on the number of transfers
54
       Transfer of Appropriations
     •Failed Separate Articles, “No Means No”

     •Purpose deleted, amount zeroed, or failed
     separate appropriations article, means no
     appropriation is made for that purpose
        • Spend no money for that purpose
        • Transfer no money to that purpose
55
            Budget Committees

     •Official Budget Committee, adopted
     under RSA 32:14
     •Advisory Committees are allowed
       • Elected, or appointed by selectmen
       • 10% limitation does not apply
       • Selectmen’s budget is posted with the
         warrant
56
       Official Budget Committee

     •Purpose: ‘To assist voters in the
     prudent appropriation of public funds’
     RSA 32:1
     •Budget committee is supposed to
     second-guess the governing body
     •Don’t personalize differences
57
     Duties of Budget Committee
     • Review current year’s expenditures for
       perspective on budget preparation
     • Review proposals of governing body
     • Prepare budget
     • Schedule and hold budget hearings
     • Forward final proposed budget to
       governing body for posting with
       warrant
58
             10% Limitation

     •Key Concept #7

     •Total amount appropriated can’t
     exceed 10% more than total amount
     recommended by budget committee
     •Affects bottom line only, not
     individual line items (purposes)
59
               10% Limitation
     •Official Ballot Referendum (SB 2)
       • 1st session amends special warrant article,
         recommendations may be revised
         RSA 32:5, V(b)
       • Revised recommendation appears on
         official ballot (second session)
       • BUT 10% limitation based on initial
         recommendations of budget committee
60
             10% Limitation

     •10% Calculation:
       Total appropriations recommended
        by budget committee, less “fixed
        charges”
         • Bonds
         • Notes (except TANs)
         • State/federal mandatory assessments
61
     10% Limitation: Exceptions
     • Bond Article not recommended by
       budget committee in its entirety, if
       governing body adds magic language
       to warrant article

     • CBA cost items not recommended are
       automatically exempt from 10% rule
62
     10% Limitation: Exceeding

     • DRA treats meeting chronologically

     • DRA form to calculate 10% limit

     • Contingent articles in SB 2 towns


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