Frequently Asked Questions (FAQ)

Budgets and Budgeting

Question:
If our city has not adopted a budget and the new fiscal year has begun, is it legal to pass a monthly appropriation bill to pay the bills? Have other cities done this?

Answer:
Your city charter may address this issue. Some charters provide for an “interim authority” stating that if the council fails to adopt an ordinance before each new fiscal year, the council, on written request of the mayor, may make an appropriation for a department’s current expenses in an amount sufficient to cover the minimum necessary expenses of the affected department(s) until the appropriation ordinance is in force. Call the League’s information service for sample charter language for interim budgets.

Question:
Do we have to have a public hearing before adopting the budget? If so, do you have samples of these notices?

Answer:
Yes. PA43 of 1963 (MCL 141.411 et seq.) requires all local units to hold a public hearing on a proposed budget. Notice must be published at least 6 days prior to the hearing in a "newspaper of general circulation" and must include a statement, printed in 11-point boldfaced type, stating “The property tax millage rate proposed to be levied to support the proposed budget will be a subject of this hearing.” Budget hearings held in accordance with the provisions of the local charter and/or ordinance will meet this requirement. This hearing will also fulfill the requirement for a Truth in Taxation hearing. See the One-Pager Plus on adopting the budget. A sample notice is the “Plus” on this OPP.

Question:
How can our city go about setting up a budget stabilization fund?

Answer:
A budget stabilization fund is separate and distinct from the city’s general fund and must be created by ordinance or resolutions adopted by 2/3 vote of the governing body. Appropriations and expenditures from the fund need to comply with the requirements of Michigan 1978 Public Act 30, as amended . Among other things, this fund can be appropriated to cover a general fund deficit. For sample ordinances and a copy of the act, contact the Municipal Resource Center.

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