Why is non-appropriation so important? Our municipal leases automatically include non-appropriation of funds (or “funding out”) language wherever required by statute. This specialized language effectively relieves the government entity of the obligation to pay in the event funds are not appropriated, for any legal reason in any subsequent budget period. Every governing body must re-affirm their willingness and ability to pay a municipal lease, every year by including the lease payments in each new budget (no special paperwork required–the funds have been appropriated or they haven’t ). With just a handful of exceptions, most government entities simply aren’t allowed under state or local laws, to incur a municipal obligation without non-appropriation language included. Most governments treat multi-year municipal lease obligations (with non-appropriation provisions) as expenses rather than more problematic debt.
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