A city’s budget is more than a spreadsheet – it’s a roadmap for how public money will be used to serve residents. In Alabama, there’s no law that requires a city to adopt a formal budget, but the Alabama League of Municipalities and the Alabama Department of Examiners of Public Accounts both agree:

Operating without a budget invites confusion, risk, and liability.

A well-prepared budget protects taxpayers, ensures accountability, and helps local officials make financial decisions with transparency and foresight.

⚖️ The Legal Framework: What the Law Says (and Doesn’t Say)

While no section of the Code of Alabama explicitly requires municipalities to adopt an annual budget, multiple laws make budgeting a matter of good governance and legal compliance in practice.

• Section 11-43-56, Code of Alabama: Gives the council control over city finances – appropriations, expenditures, and contracts.
• Section 11-43-57, Code of Alabama: Says no money may be paid out except by council authorization.
• Section 11-43-8, Code of Alabama: Makes the mayor responsible for managing city finances and keeping the council informed.

In short:

The mayor manages, but the council decides what gets spent.

A budget provides the framework that keeps those two responsibilities in balance.

🧾 Types of Municipal Budgets

Even though not legally required, most municipalities in Alabama prepare one or more of these common types of budgets:

1. Operating Budget – Covers day-to-day expenses like salaries, utilities, fuel, and maintenance.
2. Capital Budget – Plans for major projects and equipment purchases such as fire trucks, roadwork, or public facilities.
3. Special Revenue/Grant Budgets – Track restricted funds that can only be spent for specific purposes.
4. Enterprise Fund Budgets – Used for self-supporting operations like water, sewer, or sanitation.

Each type helps clarify how money is earned, saved, and spent – and prevents funds from being used improperly.

🚫 What Happens If a City Has No Budget?

If a city operates without an adopted budget, it doesn’t automatically break the law – but it loses its first line of defense against illegal spending.

Without a budget:

• Departments lack clear spending limits.
• The council can’t accurately monitor cash flow.
• The mayor and clerk risk authorizing payments that the council hasn’t approved.

Under Section 11-43-57, no municipal funds can be spent unless the council has authorized the expenditure. Spending taxpayer money without council approval can violate both municipal finance law and the Alabama Ethics Act (§36-25-5), which prohibits misuse of public funds.

⚠️ Who Is Responsible for Unapproved Spending?

If money is spent without council authorization, the individuals who approved or issued those payments may be held personally liable.

• The mayor oversees all municipal operations but cannot spend funds not approved by the council.
• The clerk or treasurer must not issue checks or warrants without lawful council action.
• The council must approve expenditures, contracts, and appropriations.

If public money is spent improperly, the Department of Examiners of Public Accounts may order repayment and can refer cases for ethics or criminal review.

Why Budgeting Still Matters

Even without a legal mandate, a budget is a city’s most powerful management tool. It provides:

• Transparency for residents.
• Direction for departments.
• Protection for officials against financial misconduct claims.

Most importantly, it gives the public confidence that taxpayer dollars are being used for the city’s true priorities – not by guesswork or convenience.

✅ In Summary

Who Does What	Responsibility
Mayor	Prepares and recommends a proposed budget and manages finances day-to-day
Council	Reviews, amends, and approves expenditures and appropriations
Clerk/Treasurer	Maintains accurate records and issues payments only as authorized
Departments	Operate within approved limits and report expenditures

While Alabama doesn’t require a municipal budget, every good city adopts one. It’s the difference between managing by plan and managing by reaction – and it’s what keeps public trust strong.