Article 38: The Union's resources

Without prejudice to other revenue, the Union's budget shall be financed wholly from own resources.
The Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, shall lay down provisions relating to the system of own resources of the Union, which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements.

Article 39: The budgetary and financial principles

1. All items of revenue and expenditure of the Union shall be included in estimates to be drawn up for each financial year and shall be shown in the budget, in accordance with the provisions of Part II of the Constitution.

2. The revenue and expenditure shown in the budget shall be in balance.

3. The expenditure shown in the budget shall be authorised for the annual budgetary period in accordance with the law referred to in Article B (Part II, ex-279: Financial Regulation).

4. The implementation of expenditure shown in the budget shall require the prior adoption of a binding legal act which provides a legal basis for Union action and for the implementation of the expenditure in accordance with the law referred to in Article B (Part II, ex-279: Financial Regulation). This act must take the form of a European law, a European framework law, a European regulation or a European decision.

5. With a view to maintaining budgetary discipline, the Commission shall not make any proposal for a Union act, or alter its proposals, or adopt any implementing measure which is likely to have appreciable implications for the budget without providing the assurance that that proposal or that measure is capable of being financed within the limit of the Union's own resources.

6. The Union's budget shall be implemented in accordance with the principle of sound financial management. Member States shall cooperate with the Union to ensure that the appropriations entered in the budget are used in accordance with the principles of sound financial management.

7. The Union and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Union in accordance with the provisions of Article Z (Part II, ex-280 TEC).

Article 40: The Union's budgetary procedure

The European Parliament and the Council shall, on a proposal from the Commission 1 and in accordance with the arrangements laid down in Article W (ex-272 TEC, Part II of the Constitution), jointly adopt the Union's annual budget.
The Union's budget shall be established in compliance with the multiannual financial perspective referred to in Article Y (Part II of the Constitution).

To see the articles and comments of the presidium, click: http://european-convention.eu.int/docs/Treaty/cv00602.en03.pdf.

To see ammendments to these articles see: http://european-convention.eu.int/amendemTrait.asp?lang=EN.