Capital Budgeting
All towns have budgets, and many of these budgets include capital costs – buying a new plow truck, fixing the town hall, etc. However, formal Capital Budgets and Programs (CBPs) are still largely new to towns. A CBP is meant to look at annual cost for capital projects for at least the next 5 years (we suggest 10) and then propose a means of paying for them. Title 24 , section 4430 lays out the charge in more detail as follows, “A capital budget shall list and describe the capital projects to be undertaken during the coming fiscal year, the estimated cost of those projects, and the proposed method of financing. A capital program is a plan of capital projects proposed to be undertaken during each of the following five years, the estimated cost of those projects, and the proposed method of financing.” By doing this, large jumps in unexpected costs can be avoided. Creating capital reserves that are steadily funded and provide a pool of funds to cover large costs are an excellent part of such budgets.
The town plan is really where this process starts, primarily in the utilities and facilities section, but it could also come from the transportation or other sections that call for large expenditures. The CBP process then carries this to greater detail and is actually adopted by the Selectboard after a hearing. TRORC has developed materials to assist towns in this highly useful process. For more information on Capital Budgeting, or for contract assistance with your community’s Capital Budget and Program, contact Kevin Geiger at [email protected] or 802-457-3188 ext 24
Capital Budgeting Presentation-Revised