Business and Personal Finance Dictionary

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• NONAPPROPRIATION CLAUSE
  
  A provision in some municipal leases. The clause provides that the lease terminates without penalty to the lessee in the event that the municipal lessee fails to appropriate sufficient funds to make required lease payments during the ensuing annual or biannual budget period. Usually, this clause is only used in states where legal restrictions apply to the quantity of or to the approval process required for municipal debt. The nonappropriation clause is intended to avoid characterization of the lease as debt subject to such restrictions. This clause is almost always used in conjunction with a nonsubstitution clause.
  
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