NOTES ON THE ARUNDEL-ON-THE-BAY BUDGET APPROVAL PROCESS
A. Our instructions from the County are to follow our corporate process:
Our Constitution/Bylaws (Article V, Section 4) says that in levying tax district assessments, the Association shall follow its Constitutional requirements for annual dues and special assessments (which is set forth in Article V, Section 3) unless they conflict with Anne Arundel County rules.
The County says we are to follow our corporate procedures: Anne Arundel County Office of County Auditor letter of instruction, Attachment #7, “Laws and Regulations:” “The administering entity must enact the proposed budget in accordance with its by-laws,” citing Anne Arundel County Code Article 4, Section 7-101.
B. Here are the steps in the budget process:
1. Constitution Article V, Section 3 states the budget should be first proposed by
the President, Treasurer, or the Board (all members voting).
2. The draft budget must then be approved by a majority of the Board. Constitution Article V, Section 3.
3. Per County requirements, the budget passed by the Board is then presented to property owners for comment by December 31. This is done by mailing out an edition of the Pier Newsletter that contains the budget information.
4. Constitution Article V Section 3 requires that the budget should then be “ratified” by a majority vote of the community at a meeting. (Note our Constitution permits Zoom meetings.)
C. Can you change a budget item at the General Membership Meeting?
Neither our Constitution nor the County guidance addresses the specific question of whether a budget category can be changed at the budget approval General Membership Meeting. However, the logical meaning of providing a budget “for comment” is that adjustments can be made by the community as a result of comments.
D. Per County law, the budget does not focus on particular projects. We allocate category amounts for each of the purposes for which our tax district was formed. This is a legal requirement.
E. Current County procedures focus on the total of all the budget categories. AOTB may move monies between categories during the tax year.
The County has informed us that Anne Arundel County Code Article 4, Sec 7-102 requires it to focus on the total amount of the budget authorized, not the amount of the individual categories. County letter guidance at Attachment 7. As the year progresses, tax districts are able to move money from one category to another as long as they don’t exceed their total budget authorization (per the County).
F. Remember We Are Budgeting for 18 months, not just 12
You cannot look at the amount designated for a particular category and assume you can spend that entire amount in the 12-month fiscal year. That is because the amount set out in the budget has to be sufficient to fund the community for 18 months, not 12. This is because while a new fiscal year begins each July 1, we do not receive our first tax monies check until December, almost six months into the fiscal year. As a result, the amount set out in each budget category has to be sufficient to fund the community for the 18 months until that first check arrives.
This means that each year we “carry over” excess funds which become part of the next year’s budget and are officially re-allocated to budget categories for the following Fiscal Year (FY). Please keep that in mind if you are wondering if we are “putting too much money” in a particular category – divide the sum by 18 months, not 12.
Importantly, our financial records are audited by a CPA each year. That audit is submitted to the County for approval. We just received notification from the County that our FY22 (ended June 30, 2022) audit was approved.