How appropriate was that appropriation?

Many people wonder how their local government decides where to allocate funds and how they manage unexpected financial situations. Some also wish they could monitor government spending before it’s a crisis. Here’s how to understand the process of government appropriations and budgeting to be more informed and engaged in that process.

Every year, governments at all levels (federal, state, regional, and local) go through a budgeting process to determine how to allocate resources for the upcoming fiscal year. This involves estimating expected revenues from sources like taxes, fees, and grants, as well as projecting necessary expenditures for various programs, services, and operational costs.

The budgeting process typically begins with each department or agency submitting its proposed spending plans and justifications to a central budget office or finance committee. These proposals are then reviewed, prioritized, and adjusted based on the overall financial picture and the government's strategic priorities.

Once a proposed budget is finalized, it is presented to the legislative body (Mat-Su Borough Assembly, Alaska state legislature, or your local city council) for review, debate, and approval. No government can operate in a fiscal year without an approved fiscal year budget. The process allows elected representatives to scrutinize the budget, get input from residents, make amendments, and ensure that it aligns with the needs and values of their constituents.

Appropriations are the legal authority given by the council or assembly to government agencies and departments to spend allocated funds for specific purposes. These appropriations are typically made every year and are tied to the fiscal year, which differs from the calendar year for many governments. All local governments use a July to June fiscal year named on what year it ends. Starting July 1, 2024, all governments will operate under the FY2025 budgets.

When situations arise that require adjustments to the approved budget. For instance, if a government entity receives a grant or additional funding during the fiscal year that was not originally budgeted for, it must go through a process to appropriate these new funds. It doesn’t matter if it was a large federal grant for a transportation improvement or a local garden club donating $1,000 for a greenhouse – all grants and checks brought in to the city must be accepted and allocated by the governing body. This typically involves submitting a request to the legislative body that outlines the purpose and justification for the additional funding. If the legislative body does not approve the appropriation of these new grant funds, the government entity will not be able to spend or utilize those funds. In that situation, the grant money would need to be declined if pending or returned if it was already received.

On the other hand, what happens if a government entity ends up with a surplus at the end of the fiscal year, meaning they have unspent funds from their appropriations? In most cases, these surpluses cannot be carried over to the next fiscal year or reallocated by the agency without legislative approval. Instead, the surplus funds are typically returned to the general fund or reserve accounts of the government. The legislative body can then decide how to appropriate these surplus funds during the next budgeting cycle, whether it is for additional projects, programs, or building up reserves for future needs.

Governments often maintain reserve funds or "rainy day" funds to help cushion against unexpected expenses or revenue shortfalls. These reserves play a crucial role in ensuring financial stability and the continued provision of essential services during economic downturns or emergencies.

For citizens to have a voice in the budgeting process, it's important to stay informed and engaged. By Alaska law, all governments must hold public hearings and accept public comments during the budget review process. This provided opportunities for citizens to share their priorities, concerns, and support or opposition to specific budget proposals. Attending these hearings, submitting written comments, or contacting elected representatives are effective ways to make your voice heard.

The same thing applies to any budget changes. Budgets are changed only by ordinances, which also require public hearings and testimony and must be noticed to the community. In the event of a situation where revenue is less than forecast, the governing body may issue a stop-purchase order or furlough employees to ration the revenue they are receiving.

Financial stewardship is the job of your government but you have a role to supervise their job. Ultimately, an informed and engaged citizenry is essential for ensuring that government spending aligns with the needs and values of the community.

Christian M. Hartley is a 40-year Alaskan resident with over 25 years of public safety experience and public service. He runs a freelance business, Big Lake Writer, from home in Big Lake that he shares with his wife of 19 years and their three teenage sons.