Budget Glossary

 

Appropriation – A legal authorization to expend government funds.

 

Allowance – A budget amount proposed by the Governor for the legislature’s consideration.  In most cases, the legislature may reduce but may not add to the allowance.

 

Budget – A spending plan including sources and uses of funds.

 

Capital Budget – The plan of proposed expenditures for construction projects, purchase of real property and major equipment, and other long-lasting assets.  In Maryland State Government, an item usually must cost at least $100,000 and have a useful life of 15 years to be considered a capital item.  The state may issue bonds to borrow funds to finance capital items.

 

Budget Reconciliation and Financing Act (BRFA) – Separate legislation considered in conjunction with the budget to make changes in statutes to permit adjustments in appropriations or to help finance expenditures.  BRFA provisions may authorize the transfer of dedicated fund balances to the general fund, reduce the amounts of funding mandates, or allow dedicated funds to be used for new purposes, for example.

 

Federal Fund (FF) – Amounts paid to the State by the federal government, almost always for specific uses.  Federal aid for Medicaid and transportation projects are two large examples.

 

Fiscal Year (FY) – The time period a budget is in effect.  The state budgets and accounts for its finances using a “fiscal year” that begins July 1 and ends June 30.  It is named for the calendar year in which it ends.  Thus fiscal year 2008 began July 1, 2007 and ends June 30, 2008.  The 2008 legislature considered the budget for fiscal year 2009, which begins July 1, 2008.

 

General Fund (GF) - The monies available for the state to use for most of its functions without restrictions. They come mostly from income and sales taxes.  General funds do not include payments to the state from the federal government (“federal funds”), or fund sources that are restricted for specific purposes, like transportation or environmental programs (“special funds”).

 

Higher Education Fund – The state colleges and universities use a different set of fund names from other agencies.  Higher education funds are divided into “current unrestricted” (CUF) and “current restricted” (CRF). “Current Unrestricted Funds” are most of the institutions’ revenue sources.  They include the state appropriation, tuition and student fees, and revenues from residence halls, dining services, and athletics.  “Current Restricted Funds” are those whose use is restricted by law or by the donor.  It is mostly research grants, and donations made for specified purposes.

 

Operating budget – The budget for ongoing operations, as distinct from the “capital budget.”  The balanced budget requirement applies to the operating budget.

 

PAYGO – “Pay-as-you-go” financing for capital projects: the practice of using current revenues for capital items, rather than borrowing funds by issuing bonds.  In years with budget surpluses, the state sometimes uses PAYGO to fund a larger capital program.

 

Special Fund (SF) - Fund sources that are restricted for specific purposes, like transportation or environmental programs.

 

Spending Affordability – A process set out in Maryland law, whereby a legislative committee annually recommends to the Governor a limit on the amount of growth in the state budget.  The calculation of the growth rate for spending affordability purposes differs from other calculations of the budget growth rates because the spending affordability calculation contains several adjustments to capture ongoing spending from state sources.  For example, federal funds, expenditures for construction projects, and payments to reserve funds are not counted in the spending affordability calculation, but most special funds and current-year deficiency appropriations are.  The spending affordability recommendation is not binding on the Governor or the legislature.  However, the legislature tends to use it as a guide in its action on the budget. 

 

Structural balance, structural deficit – The difference between ongoing revenues and on-going expenditures during a fiscal year.  If on-going expenditures exceed on-going revenues, the state is in a structural deficit.  The state can have a structural deficit but still have a constitutionally-balanced budget because of an adequate beginning fund balance to absorb the difference, or because of the use of fund transfers or other temporary revenues.