When a player payroll goes over the limit, the site adjusts the payroll from another budget line item. It happens automatically, but there isn't a trail to see it. It just drops $1 million from a line item and increases payroll by that number.
WIS has given the order from where each successive million is taken from, but I don't really remember it. I believe it starts with $1 million from prospect, then scouting, then training, and then medical, but don't quote me on the order.