Many municipal comptrollers have asked me how to recognize unanticipated revenue resulting from a grant. Most commonly, they want to know if it’s okay to offset the receipt of these funds with expenditures resulting from the grant since they were not budgeted.
In most cases, the answer is no, revenues and expenditures must be recognized on a gross basis.
The grant should be accepted at a public hearing in accordance with RSA 31:95b. Once approved to accept and expend the grant, the municipality’s budget may be amended. The estimated revenue AND the appropriations may be increased. Now, there is no need to worry that expenditures incurred as a result of the grant will cause the municipality to overspend the original, adopted budget.
For further questions on recognizing unanticipated revenue, please contact our office.