The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Budget Guide

Reference Number: MTAS-1786
Tennessee Code Annotated
Reviewed Date: October 10, 2016
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(NOTE: Content in this section was formerly distributed as the "Budget Manual" publication.)

Cause it’s better to have money and not need it than to need it and not have it.

-Richard Pryor, Car Wash, 1976

We all know what a budget is: a record of the money we expect to receive and how we expect to spend it. It’s a pretty simple concept but a little more difficult to put into action, especially when rules and regulations from state and federal agencies are thrown into the mix.

Why You Need a Budget

The state of Tennessee has a few things to say about your municipal budget. According to T.C.A. § 6-56-201 et seq., otherwise known as the Municipal Budget Law of 1982, “The governing body of each municipality shall adopt and operate under an annual budget ordinance. The budget ordinance shall present a financial plan for the ensuing year … ” Furthermore, the city’s charter may dictate various other regulations, in addition to state law budget requirements. Refer to your city’s charter to ensure proper compliance. Besides being required by law, having a budget is not a bad idea. Can you imagine what it would be like if your city or town just took whatever money it received and simply paid for everything the departments spent? It might be fun to buy everything you think you need and want, but how long would it take for your checks to bounce? You need a plan of action with limits and controls.

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