As 2025 wraps up, it’s time for many Arizona HOAs and condominium associations to begin preparing their budgets for the upcoming year. A well-planned budget is one of the board’s most important responsibilities. It ensures financial stability, supports necessary maintenance and reserves, and helps avoid unpleasant surprises.
The budgeting process should begin with a careful review of last year’s actual expenses and a realistic look at the year ahead. Boards should evaluate vendor contracts, anticipate cost increases, and plan for upcoming maintenance or capital improvement projects. Reviewing the community’s reserve study is equally important to determine whether long-term funding remains adequate. Including a small cushion for unforeseen expenses can also protect against unexpected costs throughout the year.
Transparency and communication are key elements of effective budgeting. By reviewing financial data in open board meetings and sharing clear summaries with homeowners, boards can strengthen member trust and encourage community engagement.
Every budget generally includes two main components: the operating budget, which covers day-to-day expenses like insurance, landscaping, and management fees; and the reserve budget, which funds long-term repairs and replacements such as painting, paving, or roofing projects. Keeping reserves properly funded not only helps avoid special assessments but also supports long-term property values.
Don’t put off budgeting—if your association hasn’t started, the time is now! Allow adequate time for review and board approval before the new fiscal year begins. Following the association’s governing documents and maintaining regular communication with members will help ensure a smooth and compliant process.
For additional tips and step-by-step guidance, view our firm’s Cheat Sheet:
Budgeting for Community Associations.
