Under a new Florida law, condominium boards must simultaneously provide a substitute budget when proposing an annual budget that exceeds 115% of the previous year’s budget. This substitute budget must exclude discretionary expenditures not required to be in the budget.
Boards must determine whether their proposed budget surpasses the 115% threshold, keeping in mind that certain expenses, such as insurance premiums, required reserves, and specific repair costs, are excluded from the calculation. They must also clarify which expenditures are discretionary. If a board’s budget exceeds the 115% threshold, both the proposed and substitute budgets must be sent to unit owners at least 14 days before any meeting to consider them. Unit owners vote on the substitute budget first. If the substitute budget is approved by a majority of all members’ voting interests (unless the bylaws require adoption by a greater percentage of voting interests), then the substitute budget is adopted. If this approval threshold is not reached, then the board may adopt its initially proposed budget.
To navigate these changes effectively, condominium boards should consult legal, management, and accounting professionals well in advance of budget season.
