Local governments are required by state law to adopt a balanced budget each year.

• A. Not specified
• B. True
• C. Sometimes
• D. False

Answer: (B)

Local governments in Georgia must adopt a balanced budget each year. A balanced budget means the amount planned to spend cannot exceed the revenues the government expects to receive; ongoing expenditures must be funded from available resources, not from anticipated deficits. This requirement prevents financing operating activities with debt or reserves in an ad hoc way and keeps the budget in line with what is realistically collectible or receivable. If revenues fall short, the budget must be adjusted—through spending reductions, revenue increases, or use of previously accumulated fund balances—not by approving a deficit in the operating budget. Because of this statutory obligation, the statement is true. The other options aren’t correct because the requirement is not optional or undefined; it’s a mandated practice.