Appropriation vs Cash
Appropriations do not necessarily represent actual cash available for expenditure.
A budgetary appropriation is an authorization granted by the legislature to make expenditures and incur obligations for specific purposes. A legislative appropriation is usually limited in the amount and time during which it may be expended. Any further or special appropriation authorized after final action is taken on the appropriation bill is referred to as a supplementary appropriation.
After the budget is enacted into law, budgetary accounts are established in the state's accounting system to record the specific spending authorizations granted by the legislature. The accounts are credited with the original and any supplementary appropriations, and are charged throughout the year with any expenditures and encumbrances. State agencies are not permitted to spend beyond their annual appropriated amounts.
Appropriation vs. Cash
There is a crucial distinction between having cash in a particular fund and having an appropriation in a fund. Having cash in a fund is like having money in a bank account. Cash can come into a fund from various sources - taxes, sales of government services, fees, etc. Once it is deposited into a fund, it stays in the fund until it is spent, like money in a bank account.
Appropriation, on the other hand, is official permission to spend money out of a fund.
Two things are required before an agency can spend money out of a fund:
There are times when the legislature may appropriate more than is available in a fund. This occurs particularly in funds with revenue sources that are uncertain — for example, fees, fines, building permits, planning fees, etc.
The legislature may want to appropriate funds only once a year during the annual budget-setting process - but the agency that has the appropriation can still only spend the appropriation when cash is actually available in the fund. Even with an appropriation, though, an agency cannot spend money that is not there.