2023 Budget Not Passed...now what?

Started by JerryS19 • 12 replies • 1373 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

JerryS19 (Florida)
Posts: 3

Posted:

We just held our annual membership meeting and the proposed 2023 budget did not pass. We are a not-for-profit corp. of 200 homes in FL. There is no mention in our by-laws about procedure for when a budget is not passed. Do we just stay with the 2022 budget? Thanks in advance!

MichaelS56 (Minnesota)
Posts: 859

Posted:

Very interesting question. Our governing documents do not mention what we would do if our annual budget did not pass at an annual meeting. As Board President I would ask the Board to vote to follow the previous budget for the time being. Then begin the process to determine why it did not pass and then determine next steps. Is your board still able to increase the monthly assessment for 2023 knowing that cost are to go up, or do you have to keep that at the same amount?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Why did it not pass? Most HOA's are non-profit but NOT charitable ones. They are to spend out as much as they collect. (Give or take a reserve account/savings). What was the issue to prevent a budget?

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

Did it not pass, or was it actually voted down? Depending on how your bylaws are written, there is a difference. For example, if your bylaws actually require a "no" vote by a percentage of owners, then if you didn't have enough "no" votes, the budget is considered to be approved since a non-vote is not considered a "no".

If your budget actually was voted down, then typically you keep the current budget. If something like this happened in my community, the board would send out the "new" budget for the year and coupon books along with a letter listing the services that will be cut since the money won't be available (eg. reduced pool or clubhouse hours, less frequent lawn care, delayed maintenance, and the like). Homeowners need to understand that decisions have consequences.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JerryS19 on 02/17/2023 3:01 AM
We just held our annual membership meeting and the proposed 2023 budget did not pass. We are a not-for-profit corp. of 200 homes in FL. There is no mention in our by-laws about procedure for when a budget is not passed. Do we just stay with the 2022 budget?

Is this a Florida condominium? Or is it a subdivision of stand-alone homes? Or something else.

FS 718 (for condos) and FS 720 (for certain HOAs) have a lot to say about approval of budgets.

If you have no idea what FS 718 and FS 720 are, then your board should ask an attorney about what is required to approve budgets; what happens if there is no approval; and so on.

JerryS19 (Florida)
Posts: 3

Posted:

The 2023 budget included a $150/yr increase mainly due to our liablity insurance doubling. A lot of members claim the increase was unjustified because we have "all this $$$ lying around" in our reserves so we should use those funds. Treasurer tried to explain (to no avail) that the reserves must be maintained for future repairs/replacement of corporate property. Our present dues are $900/yr for a pool, marina, clubhouse AND 15K gal of water from a community well!

JerryS19 (Florida)
Posts: 3

Posted:

The proposed budget was voted down: 20 yes / 60 no

LoriM15 (Florida)
Posts: 1,009

Posted:

What do your documents say about the budgeting process? Most HOAs that I am aware of in Florida do not require a membership vote to approve a budget. FS720 does not require it either.

In our community, the treasurer/board prepares the budget. We follow the statute and send it out for review and have a budget meeting to address any concerns. But the board has the sole right to approve the budget and any increases.

I know that is not the same procedure as in other states, but it IS allowed and commonly followed in Florida under FS718 and FS720.

Can you post the part of your documents that talk about the budget process?

KerryL1 (California)
Posts: 14,550

Posted:

Again, Lori probably is on the right track, Jerry. She's a really seasoned and active board member of a large and complicated FL HOA.

I, too, was surprised that Owners have the power to simply with their attendance & up & down vote to defeat a the Board's budget proposal. They sure may not in CA or in some other states we've seen on this forum.

Are you on the board, Jerry?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

In my HOA the BOD presents a Budget to fellow owners on 12/01 which may include a dues increase of any size depending on what the BOD believes is proper. That Budget become effective on 01/01. Owners do not get to vote on it.

That said, owners can reject the budget by calling a Special Meeting and 51% OF ALL OWNERS voting to reject the Budget. If rejected, the "old" Budget is used with an automatic 5% increase in Dues.

MichaelT21 (Arkansas)
Posts: 200

Posted:

Our association doesn't have homeowners approve budgets, rather, we have homeowners ratify budgets. Ratification is different than approval. To not ratify a budget, 50% of all homeowners must vote down the budget at a meeting, which is 138 homeowners for our community. We'd never ever get 138 homeowners to come to a meeting and vote down a budget, thus, our budgets always are ratified.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I would suspect that you are stuck with the old budget (i.e. the previous years assessment amount)

ElleN (Idaho)
Posts: 4,420

Posted:

FS 720.303(6) (d) and (f) describe two instances where an owners' vote may be required to pass a budget.

Not that the OP's HOA is subject to FS 720. But it might be.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here