Originally Posted by Descant
The money stays in town, or goes back to the taxpayers.
There will often be "extra" revenue since budgets plan, for example, to hire an employee for a year. If he leaves and it takes three months to hire a replacement, you have three months in the salary and benefit accounts left over. This is referred to a sa "lapse" in the budget. You can also have excess revenue because the budget did not anticipate particular income. For example, the economy booms and lots of people buy and register new cars at higher registration fees than their old vehicles. Unanticipated revenue.
At Town Meeting in March, the voters can decide what to do with the money, and it does not all have to go to one place. Usually, the Board of Selectman would propose a warrant article requiring the funds be used to offset next year's taxes. At the meeting, voters could amend that article to do a variety of things as long as suitable for a government to accomplish. For example, increase the "surplus account". (Bad name, should be called "working capital") The voters could also add the funds to a capital reserve account for a variety of purposes, new fire truck, new or rehabbed library, etc. School districts generally return surplus to their respective towns, although they can word warrant articles to "add $50,000 or 25% of surplus, whichever is less, if any, to be added to the roof repair capital reserve fund."
The ability to just spend money at the end of the year is somewhat limited because the Selectmen, or School Board, cannot spend unless there is a line item in the budget for that category. They can manage the money, moving it within the budget. Sometimes you will see "placeholders", a line item with $1.00, so that the voters authorize the category if there is money available to be used as the year end approaches. RSA's control all this and are similar for cities and SB2 towns.
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