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6. It helps preserve the community credit rat- and debts that would hamstring its ability to fin- ing by preventing an over-extension of cre- ante more important capital improvements at a dit and maintaining at all times a credit re- later date. Where there is no city planning commis- serve for emergencies. sion, the capital budget should be prepared by a planning consultant, the council, or by the clerk. 7. It integrates the plans and projects of all (For more information, on one aspect of capital municipal departments and agencies thereby budgeting, see League memo "Building Reserves eliminating conflicting and overlapping proj- for Public Works.") ects. 8. By insuring prior consideration for all capi- tal improvements, it helps guarantee ample time for detailed and careful planning of the actual program. The responsibility for capital budgeting usually should be entrusted to the chief administrative offi- cer:the clerk,clerk-administrator,or city manager. Aiding this person should be the council, a com- mittee of the council, the city planning commis- sion,and the treasurer or other chief fiscal officer. The following procedure is generally used in capital budgeting. A priority listing is made of an- ticipated capital improvements — usually those thought needed within 8 to 10 years. With this in- formation in hand,a careful evaluation is made of all the listed projects,eliminating those which over- 1 lap or duplicate. Then,a priority list of capital im- Capital Improvement Budgeting provements is made on the basis of need,consid- ering the community's present and future program Capital budgeting,as previously defined,is a list- of public services. ing of needed capital improvements,giving their order of priority,and describing the means of fin- These improvement projects are then woven into ancing them. Besides being one of the major tools a six-year capital improvement program on the basis of planning,a capital budget can provide some or of the established priority. When viewed in the i all of the following advantages: light of the community's financial situation,it may be found that some of the projects must be defer- 1. It keeps the public informed about future red beyond the six-year improvement period,and needs and protects the councilmembers from others deferred indefinitely. Following this,those pressure groups seeking projects well down projects to be recommended for the coming bud- on the priority list. get year must be selected. This,in effect,becomes the recommended program. 2. It will often reduce or stabilize the tax rate. The priorities established in the capital budget 3. It establishes an orderly capital improvement program for the following years remain tentative program,preventing the peaks and valleys in and should be reviewed annually. At such time, a community's debt retirement program. consideration should also be given to the addition of new projects and the deletion of others already 4. Frequently, it allows a community to move on the list. gradually to a pay-as-you-go program of capi- tal expenditure financing for a considerable Although capital budgeting, from this descrip- portion of its improvements. tion, may appear cumbersome and unwieldy for the small city, this is actually not the case. The J 5. Under it, capHal improvements are carried smaller the city the more important capital budget- out in a logical and orderly manner,rather ing becomes. A capital budget provides protection than on a hapgazard basis, to the small city helping it to avoid commitments