What is an HOA operating budget?

The operating budget covers the costs of running the community each year: landscaping, utilities for common areas, insurance, management, routine maintenance and administration. The planned contribution to reserves is usually included as a line too.

Total budgeted expenses, less any other income, are divided among the units by the formula in the governing documents. That gives each owner's regular assessment for the year.

Many governing documents and state laws require the board to share a proposed budget with owners before the year begins, and some limit how much assessments can rise without an owner vote. Comparing actual spending with the budget each month keeps surprises small.