Financial Emergencies & Unanticipated Expenses

Training for: Legal Notes

We’re often asked whether selectmen have some inherent authority under State law to overdraft an account or to spend from surplus or some other source to address emergencies or pay for unanticipated expenses. The answer generally speaking is no, they don’t.

Any authority to exceed budgeted appropriations in case of emergency or unanticipated expense must come from town meeting (the budgetary authority in most municipalities). Unless the voters have already (1) established a contingency fund for emergencies, or (2) authorized the selectmen to spend from surplus or unexpended appropriations, or (3) funded a reserve account, a special town meeting will be required to authorize an overdraft or appropriate additional funds.

Ideally, this should take place before additional expenditures are made. (A special town meeting can be called with only a seven-day warrant.) But we recognize this may not always be possible or realistic, so where immediate action is imperative – for example, replacing a broken furnace in January – the selectmen may choose to authorize the expenditure anyway and trust the voters to ratify it afterward. This strategy is dependent on the good faith of both the selectmen and the voters, however, and should be employed only if and as absolutely necessary since the selectmen may be personally liable for the expenditure if the voters later refuse to ratify it.

As we said, there is generally no emergency spending authority under State law, but there are two exceptions. For road maintenance (including snow plowing) and repairs, 23 M.R.S.A. § 2705 authorizes the road commissioner, with the written consent of the selectmen, to spend up to 15% more than was budgeted if that amount is insufficient (see “Winter Road Budgets,” Maine Townsman, Legal Notes, March 2014).

Also, for general assistance, because municipalities have a statutory obligation to provide aid to eligible persons whether or not sufficient funds have been appropriated, the authority to overdraft the GA budget, if necessary, is implied (see “Failing to Fund GA,” Maine Townsman, Legal Notes, June 2011).

For more on overdrafts and budgeting generally, see Chapter 8 of MMA’s Municipal Officers Manual, available free to members at www.memun.org. (By R.P.F.) n

We’re often asked whether selectmen have some inherent authority under State law to overdraft an account or to spend from surplus or some other source to address emergencies or pay for unanticipated expenses. The answer generally speaking is no, they don’t.

Any authority to exceed budgeted appropriations in case of emergency or unanticipated expense must come from town meeting (the budgetary authority in most municipalities). Unless the voters have already (1) established a contingency fund for emergencies, or (2) authorized the selectmen to spend from surplus or unexpended appropriations, or (3) funded a reserve account, a special town meeting will be required to authorize an overdraft or appropriate additional funds.

Ideally, this should take place before additional expenditures are made. (A special town meeting can be called with only a seven-day warrant.) But we recognize this may not always be possible or realistic, so where immediate action is imperative – for example, replacing a broken furnace in January – the selectmen may choose to authorize the expenditure anyway and trust the voters to ratify it afterward. This strategy is dependent on the good faith of both the selectmen and the voters, however, and should be employed only if and as absolutely necessary since the selectmen may be personally liable for the expenditure if the voters later refuse to ratify it.

As we said, there is generally no emergency spending authority under State law, but there are two exceptions. For road maintenance (including snow plowing) and repairs, 23 M.R.S.A. § 2705 authorizes the road commissioner, with the written consent of the selectmen, to spend up to 15% more than was budgeted if that amount is insufficient (see “Winter Road Budgets,” Maine Townsman, Legal Notes, March 2014).

Also, for general assistance, because municipalities have a statutory obligation to provide aid to eligible persons whether or not sufficient funds have been appropriated, the authority to overdraft the GA budget, if necessary, is implied (see “Failing to Fund GA,” Maine Townsman, Legal Notes, June 2011).

For more on overdrafts and budgeting generally, see Chapter 8 of MMA’s Municipal Officers Manual, available free to members at www.memun.org. (By R.P.F.) n