Ch. 486                                    1995 LAWS OF MARYLAND

Section 7-302

Annotated Code of Maryland

(1988 Replacement Volume and 1994 Supplement) (1995 Replacement Volume)

Preamble

WHEREAS, The budgetary system of the State of Maryland, as a rule, requires all
unexpended or unencumbered balances of the annual appropriation made to the State's
agencies and units to revert to the General Fund of the State Treasury at the end of each
fiscal year; and

WHEREAS, While this reversion requirement presumably was intended to promote
fiscal responsibility and restraint, it has often worked to foster a "use it or lose it"
philosophy among State agency managers; and

WHEREAS, When the General Assembly restructured the higher education system
in the State in 1988 it made a deliberate policy decision to exempt the University of
Maryland System from the general rule on the reversion of unexpended funds and
codified that exemption at § 12-105(d)(3)(ii) of the Education Article; and

WHEREAS, This approach to budgeting, often referred to as "expenditure control
budgeting", gives public managers more flexibility in responding to changes in citizens'
needs and priorities and more incentive to exercise responsible control over their agency
budgets; and

WHEREAS, Expenditure control budgeting has been provided by local law to
several counties and municipalities throughout the nation with respect to their budget
systems and enables local agencies to shift unused funds to new priorities because they
are able to carry forward those funds into the next fiscal year; and

WHEREAS, Expenditure control budgeting is frequently and successfully utilized
in the private sector and, as a matter of sound public policy, should be extended to
agencies, departments, and other units of the government of the State of Maryland; now,
therefore,

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - State Finance and Procurement

7-302.

(A)    Except as otherwise provided by law AND SUBJECT TO SUBSECTION (B) OF
THIS SECTION, at the end of a fiscal year, the unspent balance of each appropriation that
was made for that fiscal year to an officer or unit of the State government or to an
institution reverts to the General Fund of the State.

(B)     SUBJECT TO SUBSECTION (E) OF THIS SECTION, THE GOVERNOR SHALL; ON
THE RECOMMENDATION OF THE DEPARTMENT OF BUDGET AND FISCAL PLANNING,
ESTABLISH A PILOT PROGRAM WITHIN TWO CABINET AGENCIES OF THE STATE
GOVERNMENT IN WHICH:

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