Note: This is an excerpt from the 2023 Budget Primer. Purchase a copy to support Sycamore’s work or download a free PDF here.
Appropriation – Funding authorized by the General Assembly through the appropriations act. The legislative process associated with the budget and appropriations bill may also be referred to as the appropriations process. The budget document also uses the terms appropriation and state appropriation to refer to amounts authorized to be spent from state revenues and reserves.
Allotment – The allocation of funds to an agency or program by the Tennessee Department of Finance & Administration. These allocations must be consistent with the appropriations made by the General Assembly.
Balanced Budget Requirement – The Tennessee constitution’s requirement that state expenditures each fiscal year cannot exceed revenues and reserves in that year. This requirement applies at year-end.
Base Budget – A part of the budget appropriated to continue the current level of services, usually on a recurring basis. The base budget grows as new recurring cost increases are enacted. The base budget does not increase for non-recurring cost increases.
Behind the Budget – Occurs when the Finance Committees hold a piece of legislation with a fiscal impact until the appropriations bill passes out of the committee. This practice is used to ensure that General Assembly does not mistakenly pass a bill that must be voided due to lack of funding.
Budgeted Revenues – Collections and revenue sources that are appropriated for specific purposes in a given fiscal year – whether for spending or deposit to a reserve. Collections that exceed revenue estimates are not budgeted for expenditure. They are often referred to as over-collections or surplus, are held in reserve, and become available for use in subsequent fiscal years.
Capital Budget – Includes items related to the acquisition, construction, renovation, and maintenance of buildings, grounds, and other capital assets.
Collections – State tax revenues collected by the state of Tennessee. Budgeted collections are those that are spent in the fiscal year in which they are collected or allocated to a reserve for a future purpose. Collections in excess of those budgeted are often referred to as over-collections.
Constitutional Spending Limit – The restriction in Tennessee’s constitution that limits the growth rate of appropriations from state tax revenues in any fiscal year to no more than the estimated growth rate of the state’s economy. State law defines the latter metric law as the year-over-year rate of personal income growth in Tennessee. Often referred to as the Copeland Cap.
Copeland Cap – See Constitutional Spending Limit.
Cost Increases – The budget’s recommended funding increases in the operating budget (both recurring and non-recurring). In FY 2012 and earlier budget documents, these were referred to as “program improvements.”
Current Services Revenues – Includes revenues raised directly by agencies, departments, programs, and activities that support specific agency purposes — including some fees and licenses.
Departmental Revenues – Includes revenues received directly by departments. These include things like current services revenues, program-specific reserves, interdepartmental revenues, and donations.
Discretionary – Refers to state funding in the recurring base budget that is considered to be open to recurring budget reductions. Usually (but not always) excludes earmarked funding, state funding associated with a federal matching requirement, and funding associated with fulfilling a court mandated requirement. This differs from the federal budgeting term, which refers to funding that is appropriated on an annual basis (versus mandatory or entitlement funding).
Earmark – Funding for which the specific purpose is defined in law.
Expenditures – State government spending.
Federal Revenues – Funding that the state receives from the federal government for specific activities — often via grants, cooperative agreements, contracts, and entitlements. Also referred to in the primer as federal funds and federal dollars. Also commonly referred to as federal grants-in-aid.
Fiscal Year – The 12-month period covered by an annual budget. Tennessee’s state fiscal year spans July 1st to June 30th. The federal fiscal year spans October 1st to September 30th.
Funds – Repositories of money for specific purposes that often draw on specific revenue sources. The General Fund, Education Fund, Highway Fund, Debt Service Fund, Capital Projects Fund, Facilities Revolving Fund, and Local Government Fund (Cities and Counties – State-Shared Taxes) are the state’s main funds to which the budget document refers.
Great Recession – The economic downturn that lasted December 2007-June 2009.
Interdepartmental Revenue – Revenues collected directly by a department from another state department for a particular good or service.
Non-Recurring – Non-recurring expenditures are one-time expenses or projects. Non-recurring revenues are those from one-time sources that, once used or depleted, are not expected to be available again.
Operating Budget – Includes all the costs associated with operating a department or program except capital costs.
Over-Appropriation – The bottom-line official estimate of underspending across all of the budget’s departments and programs. Underspending is associated with spending less than the amount explicitly appropriated or allotted.
Over-Collections – The amount of state tax collections in excess of budgeted state tax revenues. Also referred to as a surplus.
Recurring – Recurring expenditures are ongoing expenses or projects. The absolute dollar amount associated with recurring expenditures is carried forward in the recurring base budget. Recurring cost increases must be appropriated in order for the recurring base to grow – even for programs like TennCare in which expenditures are expected to grow due to the underlying requirements of the program (e.g., enrollment growth and inflation).
Recurring revenues come from regular ongoing sources such as state tax collections.
Reserves – Funding held for future needs.
Reserve for Revenue Fluctuations – Tennessee’s rainy day fund, reserved for use when revenue collections fall short of budgeted tax revenues.
Revenues – All the sources of money used to cover the state government’s expenditures — including state tax collections, reserves, federal funding, tuition and fees paid by students at public colleges and universities, state lottery proceeds, and current services and other departmental revenues.
Reversion – Refers to amounts associated with departmental and programmatic underspending that revert back to the General Fund at the end of the fiscal year.
Stripper Amendment – An amendment to the appropriations bill that is often adopted on the floor of the House and Senate to strip the bill of any changes that have occurred in the other chamber. Typically, the second chamber to act on the bill on the floor would adopt a stripper amendment and then attach its own amendments – many of which may be identical to those from the chamber.
Supplemental Appropriations – The appropriation of additional funding from state tax revenues or reserves for a department or program in the middle of a fiscal year.
Sweeper Clause – A provision in the appropriations bill that makes funding available for any legislation with a fiscal note cost estimate of less than a certain amount in its first year. In the 2022 appropriations act, the sweeper clause included any amounts less than $50,000. The sweeper amount may vary from year to year.
Tax Expenditures – Estimates of the amount of state revenue not collected because of exclusions or exemptions from a tax.
Underspending – An amount by which a department or program spends less than the amount explicitly appropriated or allotted. Actions taken to generate savings mid-year would be categorized as one type of underspending. Another type of underspending occurs when departments do not fill all of their vacant employee positions funded in the budget. Aggregate underspending is officially estimated at the bottom line of the budget instead of within each department or program. This bottom-line estimate is known as the over-appropriation.
