Here's an all too common story that absolutely shreds budgetholder engagement.
Budgetholder sits down and builds up, say, their operating expenses budget.
It then goes up the ranks a step or two, and then gets bounced back down and they are told: it needs to be however much less, percent or pounds.
Now, most people approach their work in good faith.
So the budgetholder thinks: why on earth did I go through the trouble of taking the time to build up what I genuinely think my part of the business needs to spend this year, if they’re just going to say it's too much?
You may say that's not fair, because of course you have to take into account the spending of the whole business, factor in macroeconomic changes, the revenue plan, etc etc.
I hear you, but it also doesn't matter. It feels unfair to the budgetholder.
What I strongly suggest is that you and/or your leadership decide, for every template you hand out, what is the expected or acceptable total. If you're worried abut encouraging spending, make it lower than you actually expect, and explain to budgetholders that if they feel they need extra they can explain and justify that, and you will assess.
Note that the end result is basically the same! The budgetholder may or may not get the full amount they ask for.
But so much in budgeting, as in life, is psychological; much better to say that they can ask for more, but it's not guaranteed, than to let them freely build up a plan only to decline it.
And put the amount in a big font at the top of every template in a jazzy colour.