Question

The newly elected mayor of Oxnard noticed that in the recently enacted budget of that city’s General Fund, revenues exceed expenditures by $15,000. Later that year, after a hurricane caused a large amount of damage, she ordered the city’s finance officer to write a check for $15,000 from the General Fund to an emergency relief fund. Because of the unexpected nature of the hurricane, no appropriation had been made to cover this transaction. When confronted by the press, she pointed out that the state’s balanced budget laws require only that the General Fund “break-even” and that she could not, in good conscience, allow the city to retain idle resources when people needed help.

What, if anything, did the mayor do wrong?

Answer 1

Answer:

The mayor probably violated the laws by spending moneys that had not been appropriated by the legislative body. The mayor could have asked the legislative body to make an appropriation for emergency relief. Further, although the problem is silent on the issue, it is possible that actual revenues were being received at a slower pace than contemplated in the budget. Before taking any action to increase spending for the year, the mayor needs to be sure the balanced budget at the beginning of the year is still in balance.