An HOA operating budget is a projection of the money needed by the association to cover its recurring operating expenses and it should also include a line item for the amount to be transferred to fund the association’s reserve fund. Washington and Oregon law requires that the HOA adopt an operating budget every year. In practice, this means the HOA revises its budget from the previous year to consider changes in its financial position and cost structure. The budget adoption process is typically controlled by state law, but procedures are included in some governing documents. In most associations, the governing documents provide that the budget is adopted by the board rather than by a vote of the owners. However, even when the documents give the board the right to adopt the budget, a vote of the owners may be required to ratify the budget or to adopt a budget that would require a significant increase in regular assessments (aka owner dues) as discussed below. The HOA must distribute its budget to all owners.

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