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Article 2

Article 78 of the Treaty establishing the European Coal and Steel Community is replaced by the following :

" Article 78

1 . The financial year shall run from 1 January to 31 December .

The administrative expenditure of the Community shall comprise the expenditure of the High Authority , including that relating to the functioning of the Consultative Committee , and that of the Assembly , the Council , and of the Court of Justice .

2 . Each institution of the Community shall , before 1 July , draw up estimates of its administrative expenditure . The High Authority shall consolidate these estimates in a preliminary draft administrative budget . It shall attach thereto an opinion which may contain different estimates .

The preliminary draft budget shall contain an estimate of revenue and an estimate of expenditure .

3 . The High Authority shall place the preliminary draft administrative budget before the Council not later than 1 September of the year preceding that in which the budget is to be implemented .

The Council shall consult the High Authority and , where appropriate , the other institutions concerned whenever it intends to depart from the preliminary draft budget .

The Council shall , acting by a qualified majority , establish the draft administrative budget and forward it to the Assembly .

4 . The draft administrative budget shall be placed before the Assembly not later than 5 October of the year preceding that in which the budget is to be implemented .

The Assembly shall have the right to amend the draft administrative budget , acting by a majority of its members and to propose to the Council , acting by an absolute majority of the votes cast , modifications to the draft budget relating to expenditure necessarily resulting from this Treaty or from acts adopted in accordance therewith .

If , within 45 days of the draft administrative budget being placed before it , the Assembly has given its approval , the administrative budget shall stand as finally adopted . If within this period the Assembly has not amended the draft administrative budget nor proposed any modifications thereto , the administrative budget shall be deemed to be finally adopted .

If within this period the Assembly has adopted amendments or proposed modifications , the draft administrative budget together with the amendments or proposed modifications shall be forwarded to the Council .

5 . After discussing the draft administrative budget with the High Authority and , where appropriate , with the other institutions concerned , the Council shall act under the following conditions :

( a ) the Council may , acting by a qualified majority , modify any of the amendments adopted by the Assembly ;

( b ) with regard to the proposed modifications :

- where a modification proposed by the Assembly does not have the effect of increasing the total amount of the expenditure of an institution , owing in particular to the fact that the increase in expenditure which it would involve would be expressly compensated by one or more proposed modifications correspondingly reducing expenditure , the Council may , acting by a qualified majority , reject the proposed modification . In the absence of a decision to reject it , the proposed modification shall stand as accepted ,

- where a modification proposed by the Assembly has the effect of increasing the total amount of the expenditure of an institution , the Council may , acting by a qualified majority , accept this proposed modification . In the absence of a decision to accept it , the proposed modification shall stand as rejected ,

- where , in pursuance of one of the two preceding subparagraphs , the Council has rejected a proposed modification , it may , acting by a qualified majority , either retain the amount shown in the draft administrative budget or fix another amount .

The draft administrative budget shall be modified on the basis of the proposed modifications accepted by the Council .

If , within 15 days of the draft administrative budget being placed before it , the Council has not modified any of the amendments adopted by the Assembly and if the modifications proposed by the latter have been accepted , the administrative budget shall be deemed to be finally adopted . The Council shall inform the Assembly that it has not modified any of the amendments and that the proposed modifications have been accepted .

If within this period the Council has modified one or more of the amendments adopted by the Assembly or if the modifications proposed by the latter have been rejected or modified , the modified draft administrative budget shall again be forwarded to the Assembly . The Council shall inform the Assembly of the results of its deliberations .

6 . Within 15 days of the draft administrative budget being placed before it , the Assembly , which shall have been notified of the action taken on its proposed modification , may , acting by a majority of its members and three-fifths of the votes cast , amend or reject the modifications to its amendments made by the Council and shall adopt the administrative budget accordingly . If within this period the Assembly has not acted , the administrative budget shall be deemed to be finally adopted .

7 . When the procedure provided for in this Article has been completed , the President of the Assembly shall declare that the administrative budget has been finally adopted .

8 . However , the Assembly , acting by a majority of its members and two-thirds of the votes cast , may , if there are important reasons , reject the draft administrative budget and ask for a new draft to be submitted to it .

9 . A maximum rate of increase in relation to the expenditure of the same type to be incurred during the current year shall be fixed annually for the total expenditure other than that necessarily resulting from this Treaty or from acts adopted in accordance therewith .

The High Authority shall , after consulting the Economic Policy Committee , declare what this maximum is as it results from :

- the trend , in terms of volume , of the gross national product within the Community ,

- the average variation in the budgets of the Member States ,

and

- the trend of the cost of living during the preceding financial year .

The maximum rate shall be communicated , before 1 May , to all the institutions of the Community . The latter shall be required to conform to this during the budgetary procedure , subject to the provisions of the fourth and fifth subparagraphs of this paragraph .

If , in respect of expenditure other than that necessarily resulting from this Treaty or from acts adopted in accordance therewith , the actual rate of increase in the draft administrative budget established by the Council is over half the maximum rate , the Assembly may , exercising its right of amendment , further increase the total amount of that expenditure to a limit not exceeding half the maximum rate .

Where the Assembly , the Council or the High Authority considers that the activities of the Communities require that the rate determined according to the procedure laid down in this paragraph should be exceeded , another rate may be fixed by agreement between the Council , acting by a qualified majority , and the Assembly , acting by a majority of its members and three-fifths of the votes cast .

10 . Each institution shall exercise the powers conferred upon it by this Article , with due regard for the provisions of this Treaty and for acts adopted in accordance therewith , in particular those relating to the Communities' own resources and to the balance between revenue and expenditure .

11 . Final adoption of the administrative budget shall have the effect of authorizing and requiring the High Authority to collect the corresponding revenue in accordance with the provisions of Article 49 . "