A budget surplus occurs when revenues collected exceed expenditures made, leaving the government with extra money. Municipal surpluses typically arise when actual revenues exceed projections, when departments spend less than budgeted, or when planned projects are delayed. Unlike deficits (which municipalities generally cannot run), surpluses are allowed but what happens to them varies. Surplus funds might be transferred to reserves, used for one-time capital purchases, applied to debt repayment, or carried forward to the next budget. Large recurring surpluses may indicate taxes are set higher than necessary, potentially prompting calls for tax reductions or service improvements.