Appropriation is the legislative act of setting aside treasury money for spending on a specific program. The term "appropriation" is used for spending bills because they authorize the appropriation, or taking, of money from the treasury. For instance, there are appropriation bills for the building of highways. If the required majority of the members of the legislative body votes in favor of that bill, the bill is passed. In passing the bill, the legislative body has authorized that specific sum of money be spent on that program, which in this example means the construction or maintenance of highways.
Many government spending programs actually require two sorts of bills. First, the legislature must pass an authorization bill to create a program. To continue the example of highway construction, the legislature might authorize a program to build a new limited access highway from one city to another. That authorization bill normally also would suggest an intended level of spending.
Such a project might take several years to complete. In each year, the legislature would then need to pass a bill to appropriate from the treasury a certain amount of money to spend on building that highway. If, in a later year before the highway is not finished, the legislature makes no appropriation for that project, then that project will not receive funds that year.
There also are government spending programs that do not require a separate appropriation bill. The bill authorizing this sort of program, such as the Social Security benefits program for residents of the United States, also authorizes the means for appropriating the money on a continuing basis. That sort of program, generally called a mandatory program, does not need a separate appropriation.
Programs that require an appropriation each time the legislature passes a budget are called discretionary programs. The appropriations for particular programs might be made in individual bills for specific programs, but appropriations for a wide variety of programs are often made at the same time in a much larger bill. These combined appropriation bills are referred to as omnibus spending bills.
In the United States, the requirements for appropriations are specified in the Constitution at Article I, Section 7, clause 1. It requires that all spending bills must begin in the House of Representatives. Both houses of Congress, however, must pass any appropriation bill before the money that the bill proposes to be spent is actually taken from the treasury.