Can a Louisiana parish amend a budget after the fiscal year has ended to handle adjustments that came in late?

Plain-English summary

The District Attorney for the Fortieth Judicial District wrote to the AG on behalf of St. John the Baptist Parish. Her question: can the parish amend a previously adopted budget for a fiscal year that has already ended, to account for adjustments that the parish could not estimate or did not know about during the year?

The AG said no. Two sources control: the parish's home rule charter and the Local Government Budget Act (LGBA, La. R.S. 39:1301 et seq.). Neither one allows a retroactive amendment.

The home rule charter. Under La. Const. art. VI, § 5 and La. R.S. 33:1395, St. John the Baptist Parish operates under a home rule charter. The charter's Article V (financial procedures) sets the fiscal year as January 1 through December 31, requires the parish president to submit a balanced budget, and provides for amendments during the fiscal year through Article VII, Section F. The procedure for amendments contemplates two scenarios:
- Supplemental appropriations during the year when excess revenue is certified.
- Reductions or remediation when revenue falls short during the year.

If borrowing is needed to remedy a deficit, the repayment becomes a fixed charge on the following year's revenue and must be included in the next year's operating budget. The charter is silent on amendments after the fiscal year ends. The AG read silence here as not authorizing a retroactive amendment.

The Local Government Budget Act. La. R.S. 39:1310 requires a budget amendment when one of three conditions occurs:
1. Total projected revenue for the remainder of the year is failing to meet budgeted revenues by 5% or more.
2. Total actual plus projected expenditures for the remainder of the year are exceeding budgeted expenditures by 5% or more.
3. The actual beginning fund balance fails to meet the estimated beginning fund balance by 5% or more, and the fund balance is being used to fund current-year expenditures.

The first two conditions reference "the remainder of the year," meaning the current fiscal year. The third condition also refers to the current fiscal year. None of the three statutory triggers can be satisfied after a fiscal year has ended.

The remedy when adjustments come in late. Roll them into the next year's budget. If the parish council borrowed money to cover a year-end shortfall, the repayment is a fixed charge in the next year's revenue. If accounting adjustments produce a beginning-fund-balance shortfall of 5% or more in the new fiscal year, the parish must amend the current year's budget to address it. What the parish cannot do is reach back and rewrite the closed year's budget.

What this means for you

If you are a parish secretary-treasurer or comptroller. Build your accounting calendar so that material adjustments are made and recorded during the fiscal year. If a late-discovery situation arises (a missed revenue receipt, a delayed expenditure, a misclassified entry), do not amend the prior year's budget. Instead, recognize the impact in the next fiscal year through standard accounting (beginning fund balance restatement) and, if needed, amend the current year's budget under La. R.S. 39:1310.

If you are a parish council member or president. When the question comes up at year-end, the answer is: no retroactive amendments. Any deficit borrowing becomes a fixed charge in the next budget. Any unexpected revenue is reflected in the next year's beginning fund balance. The closed budget stays closed.

If you are auditing a Louisiana parish. Look for any prior-year budget amendments adopted after year-end. They are not authorized under this opinion. The audit should flag them and ask for restatement in the current year's books instead.

If you are a parish attorney advising on year-end financial cleanup. Recommend that adjustments be processed through the current year's books and, if material, through a current-year budget amendment under La. R.S. 39:1310. Document the path; auditors and the legislative auditor will want to see why each adjustment was recorded in the current year rather than the prior year.

If you are a citizen reviewing parish budget records. A prior-year budget amendment dated after the end of that fiscal year should not exist. If you see one, it is procedurally improper under this AG opinion. Bring it to the auditor's or council's attention.

Common questions

Q: What about accruals that legitimately belong in the prior fiscal year under GAAP?
A: GAAP financial statements can recognize accruals as of the prior fiscal year end through standard year-end adjusting entries before the books are closed. That accrual recording is not a "budget amendment" in the sense of La. R.S. 39:1310. The opinion is about formally amending the adopted budget after year-end, not about year-end accounting accruals before final close.

Q: What if the issue is a misallocation rather than a deficit or surplus?
A: Misallocations between funds during the current year can be addressed by a current-year amendment. Misallocations that surfaced after year-end should be corrected through proper accounting entries (reclassifications) in the current year, not by retroactive budget amendment.

Q: Does this opinion apply to municipalities (cities, towns, villages) as well as parishes?
A: The LGBA (La. R.S. 39:1301 et seq.) applies to most Louisiana political subdivisions, including municipalities. The reasoning of the opinion (statutory text references the "remainder of the year") applies the same way. Municipalities with home rule charters should also check their charter for budget-amendment timing.

Q: What if the parish council passes a "ratifying" resolution to bless a year-end adjustment?
A: A ratifying resolution does not become a retroactive budget amendment. The opinion is direct that all amendments must occur during the fiscal year. Any year-end clean-up resolution should be styled as an acknowledgment of carryover effects on the next fiscal year, not as an amendment to the prior year's budget.

Q: What about an amendment introduced at the last meeting before year-end but adopted only after year-end?
A: The opinion explicitly does not address this scenario (footnote 8 of the opinion). It is a closer question. Best practice is to introduce and adopt the amendment all within the fiscal year. Talk to your parish attorney if the timing is going to slip.

Background and statutory framework

Louisiana home rule charter authority. La. Const. art. VI, § 5 authorizes parishes (and municipalities) to adopt home rule charters. La. R.S. 33:1395 supplies the procedural framework for adoption. A home rule charter governs the parish's affairs unless its provisions violate state law or the state constitution. As a charter parish, St. John the Baptist is subject to the LGBA as a state-law floor; the charter may add stricter requirements but may not relax LGBA minimums.

The St. John the Baptist Parish Home Rule Charter. Relevant provisions:
- Article V (financial procedures): fiscal year January 1 to December 31; balanced-budget requirement; budget ordinance effective on first day of fiscal year.
- Article V, Section D: parish council may amend the budget before adoption, but total expenditures must not exceed anticipated revenue.
- Article VII, Section F: procedures for amendments to adopted budgets. Supplemental appropriations during the year on a presidential certification of excess revenue. Required reporting and remedial action when revenue falls short. Borrowing to remedy deficits becomes a fixed charge on the next year's revenue.
- Effective date: ordinances authorizing supplemental appropriations or reductions take effect immediately on adoption but cannot be adopted at the same meeting as introduced.

The Local Government Budget Act. La. R.S. 39:1301 et seq. is the statewide budget framework for Louisiana local government. Key provisions:
- La. R.S. 39:1310 requires budget amendments in defined circumstances, all referencing the current fiscal year.
- La. R.S. 39:1311(A) defines the three trigger conditions for amendments: 5% revenue shortfall, 5% expenditure overrun, or 5% beginning-fund-balance shortfall with that balance being used to fund current expenditures.
- The chief executive or administrative officer is required to advise the governing authority in writing when the trigger conditions are met.

St. John the Baptist Parish factual context. St. John the Baptist Parish is located on the west bank of the Mississippi River between New Orleans and Baton Rouge. The DA asked the AG on behalf of the parish government. The question arose because of accounting adjustments the parish could not estimate or did not know about during the fiscal year.

Jeff Landry was the Attorney General of Louisiana at the time of the opinion. Brett A. Robinson signed as Assistant Attorney General.

Citations and references

Constitution and statutes:
- La. Const. art. VI, § 5 (home rule charter authority)
- La. R.S. 33:1395 (home rule charter adoption framework)
- La. R.S. 39:1301 et seq. (Local Government Budget Act)
- La. R.S. 39:1310 (budget amendment requirements)
- La. R.S. 39:1311 (notification and trigger framework)
- La. R.S. 39:1311(A) (advisory notice requirements, 5% triggers)

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/23-0080

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

State of Louisiana
DEPARTMENT OF JUSTICE
CIVIL DIVISION
P.O. BOX 94005
BATON ROUGE
70804-9005

Jeff Landry
Attorney General

December 20, 2023

OPINION 23-0080

84 PARISHES
La. R.S. 39:1310
La. R.S. 39:1311

The Honorable Bridget A. Dinvaut
District Attorney
Fortieth Judicial District
1342 La Hwy 44
Reserve, LA 70084

St. John the Baptist Parish may not amend an adopted budget for a prior fiscal year. All amendments to an adopted budget must take place in the current fiscal year as per the St. John the Baptist Parish Home Rule Charter and the Local Government Budget Act.

Dear Ms. Dinvaut:

You have requested an opinion from our office on behalf of St. John the Baptist Parish Government regarding whether the Parish can amend the previous fiscal year adopted budget after the fiscal year has ended to account for adjustments that could not be estimated or were unknown during the previous fiscal year. Your request has been assigned to me for research and reply.

St. John the Baptist Parish has adopted a home rule charter form of government in accordance with La. Const. art. VI, § 5 and La. R.S. 33:1395. Thus, the parish is governed by its charter (the "Charter"), unless its provisions violate state law or the state constitution. As a political subdivision operating under a home rule charter form of government, St. John the Baptist is subject to the Local Government Budget Act found at La. R.S. 39:1301, et seq. ("LGBA"). However, the provisions of the LGBA are only minimum standards that must be met, and thus, the Charter may include stricter standards than those imposed by the LGBA and may include other rules not otherwise prohibited by the LGBA or other state law.

Under Article V of the Charter regarding financial procedures of the parish, the fiscal year begins on January 1 and ends on December 31. The parish president must submit a budget and it must be balanced. A budget ordinance adopted by the parish council becomes effective on the first day of the fiscal year, unless otherwise provided therein. Section D of Article V of the Charter provides that the parish council may amend the budget before adoption but in no event shall the parish council cause the total expenditures to exceed anticipated revenue.

Procedures for amendments to adopted budgets are contained in the general provisions in Section F of Article VII of the Charter. Supplemental appropriations may be made during the fiscal year if the parish president certifies that there are available revenues in excess of those estimated in the budget. If during the fiscal year, it appears probable that the revenues available will be insufficient to meet the amount appropriated, the president shall report to the parish council without delay, indicating the estimated amount of the deficit, any remedial action taken and recommendations as to any other steps to be taken. In any event, the parish council shall take action as it deems necessary to prevent any deficit. If an emergency appropriation is made or the parish council borrows money it deems necessary to remedy the deficit, the repayment shall be a fixed charge upon the revenue of the following year and shall be included in the operating budget for that year.

Finally, an ordinance authorizing supplemental appropriations, or a reduction or transfer of appropriations may be made effective immediately upon adoption but may not be adopted at the same meeting as introduced.

As can be gleaned from above, the St. John the Baptist Parish Charter expressly provides that budget amendments are to be made during the fiscal year when supplemental or reduction of appropriations are required or appropriate. The Charter is silent regarding budget amendments after the close of the fiscal year. However, the Charter requires the parish to place a fixed charge on the revenue for the following fiscal year when the council borrows money to remedy a deficit/reduction in appropriations.

An adopted budget and any adopted amendments form the framework from which the chief executive or administrative officers and members of a governing authority of the political subdivision must monitor revenues and control expenditures. A review of the LGBA is necessary in order to determine whether budget amendments to the previous fiscal year are authorized. The budget amendment process of the LGBA is set out in La. R.S. 39:1310. It provides the following:

When the governing authority has received notification pursuant to La. R.S. 39:1311 or there has been a change in operations upon which the original budget was developed, the governing authority shall adopt a budget amendment in an open meeting to reflect such change. In no event shall a budget amendment be adopted proposing expenditures which exceed the total estimated funds available for the fiscal year.

Pursuant to La. R.S. 39:1311(A), the chief executive or administrative officer must advise the governing authority in writing when: 1) total and projected revenue, including other sources, for the remainder of the year are failing to meet total budgeted revenues and other sources by five percent (5%) or more, 2) total actual expenditures plus projected expenditures for the remainder of the year are exceeding total budgeted expenditures by five percent or more, and 3) the actual beginning fund balance fails to meet estimated beginning fund balance by five percent or more and fund balance is being used to fund current year expenditures. Two of the three of the conditions that require an amendment to an adopted budget reference the remainder of the fiscal year. It is clear that these amendments must take place during the fiscal year and not after the fiscal year ended. The third condition requiring an amendment to an adopted budget also occurs in the current fiscal year but is related to not receiving the expected revenues or sources of funds by the end of the previous fiscal year.

Neither the Charter nor the LGBA set forth a condition that mandates or provides for a budget amendment to occur after a fiscal year has ended. More importantly, the language used in both the Charter and LGBA consistently refer to budget amendments being made during the fiscal year. In the instance where accounting adjustments cannot be estimated or are unknown before the fiscal year end, the parish must place a fixed charge on the revenue for the following fiscal year when the council borrows money to remedy a deficit/reduction in appropriations. If the council does not borrow money and a shortfall of beginning funds for a particular fund balance is five percent (5%) or greater occurs, then a budget amendment must be made in the current fiscal year.

It is the opinion of this office that St. John the Baptist Parish may not amend an adopted budget for a prior fiscal year. All amendments to an adopted budget must take place in the current fiscal year as per the St. John the Baptist Parish Home Rule Charter and the Local Government Budget Act.

We trust that this adequately responds to your request and the issue that you have raised. If our office can be of any further assistance, please do not hesitate to contact us.

With best regards,

JEFF LANDRY
ATTORNEY GENERAL

BY:
Brett A. Robinson
Assistant Attorney General

JL/BAR