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Finance and Budgeting 133 ` sis leads to the development of fiscal policies.These policies should address the (�( major problems or implications identified in the financial analysis and should I provide more specific guidance to the budget and planning departments as well as the operating departments that propose capital improvements. Policies would I address such issues as: the maximum amount of debt the local government is willing to take on;the types of revenue devices that will or will not be used;the annual amount of debt service that the operating budget can absorb;the specific I types of projects or facilities that must be self-sufficient through user fees or other charges; and the degree to which local government will seek state or fed- eral grants-in-aid. In recent years a number of communities have begun to adopt fiscal policies that are related to strategic community objectives. For example, mature central "r cities are increasingly adopting policies that relate expenditures to economic de- velopment objectives.These cities may adopt policies to finance those improve- ments that are most likely to maintain or attract an industrial or commercial base, create new jobs for local residents, or generate private investments in II neighborhood revitalization. Older cities that are in serious financial difficulty are even debating policies that target expenditures to certain neighborhoods or areas and consciously write off those areas that may be beyond help. In rapidly developing newer communities fiscal policies are being adopted that will, for example, ensure environmental objectives by purchasing critical environmental areas, by purchasing parklands, or by creating greenbelts that will help shape urban growth. These communities are also paying more atten- tion to the secondary impacts of capital investments so that capital facilities, such as major sewer trunks and major expressways, are located and pro- grammed in areas where the community wants growth to occur and denied or delayed in those areas the community does not want to see developed. The CIP administrative process Earlier in this chapter the annual budgeting process was described. The capital improvements portion of that process is often a distinct element that flows through local government in separate channels. In some communities the CIP process may actually occur earlier in the annual cycle. The separate channels for the CIP come about principally because the planning agency may be the key coordinator for capital expenditures. while a budget office or city managers of- fice may be the coordinator for all operating expenditures.The CIP process may also involve additional public hearings by the planning commission. Whatever procedure is used. the process normally takes several months to complete. Ob- viously.the process varies from city to city.but the description below should be considered relatively typical. The first step in a CIP process is the analysis of the fiscal resources of the community—the revenue and expenditure projections discussed above. This is typically conducted by the finance office. After this analysis the local gov- ernment manager or mayor will meet with key aides and legislators to discuss the implications of the analysis for setting fiscal policies. The next step is the directive issued by the chief executive officer to all de- partment heads requiring that they submit proposed capital improvements projects to the agency administering the CIP. This is usually the planning agency or finance office.The directive is accompanied by forms,deadline dates, and the identification of key meeting dates. The directive will also contain the fiscal policies discussed above. The planning agency will then usually provide the detailed project forms, and instructions to departments for completing the project forms. If new procedures have been adopted there may also be a.CIP manual that describes the process and the products to be submitted. The rea.,or for this internal red tape is to en- r a