What happens to remaining uncommitted appropriation reserves at the end of the second budget year?

The remaining uncommitted appropriation reserves at the end of the second budget year lapse and return to the fund balance. This process is designed to ensure that appropriations do not remain open indefinitely, which could lead to inefficiencies or the misallocation of resources. By lapsing these unused funds, municipalities can maintain a clearer financial picture and ensure that funds are available for future budgeting processes.

This practice encourages departments to effectively manage their budgets within the allocated time frames and prevents the accumulation of unspent appropriations that would distort budget planning and financial reporting. The unused appropriations then go back into the general fund balance, making it available for reallocation in subsequent budgeting periods.