What is the definition of an appropriation in governmental terms?

The definition of an appropriation in governmental terms refers to the legal authority granted to incur expenses and spend money. This means that, through the appropriations process, a governmental body officially authorizes agencies to use funds for specific purposes. Appropriations set the parameters within which agencies can operate financially, ensuring that expenditures align with legislative intentions and budgetary constraints.

Appropriation is a fundamental concept in government budgeting, as it delineates how much money can be spent and on what programs or activities. This is critical in maintaining fiscal responsibility and accountability within government entities. The authorization must be established through legislation, indicating that appropriated funds can only be used in accordance with the stipulations outlined in law.

Understanding appropriations allows for clarity in governmental finance, as it emphasizes the distinction between simply planning or forecasting budgets and having the specific legal authority to spend funds.