the municipal secretary desktop reference manual - Southwestern ...

Commentary
The proposed capital spending plan is prospective in nature and generally extends for a period of
several years. It is the principal means by which a municipality prioritizes and presents capital
equipment, facilities and other infrastructure needs and the financing plans to support these proposed
expenditures. The preparation of the plan frequently precedes the development of the annual
operating budget. To adequately define the nature and the cost of construction and maintenance of
proposed projects, the municipality should seek inputs from its engineer, as well as its planning
commission, if one exists. The municipality's manager or secretary should be vested with the
responsibility for the final preparation of the capital plan.
2. As part of its fiscal planning process, the jurisdiction adopts by resolution a plan which
projects for several years operating revenues and expenditure needs. These projections
are based upon various assumptions as to the future economic and political
environment. They are revised yearly, once the annual budget is adopted.
Commentary
Projections of current revenues and expenditures over several years' time will enable municipal
officials to identify future operating budget needs and to develop ways and means to address them.
To give the process validity and meaning, it is critical that various assumptions be used in making
projections. As with the capital proposal, the responsibility for the preparation of this plan should be
vested in the manager or secretary.
3. Yearly operating and capital fiscal decisions for the annual budget are based upon
appropriate sections of the ordinance or resolution which have identified revenue,
operating programs and capital needs.
Commentary
If fiscal planning is to be a meaningful policy and management tool, its proposals, where appropriate,
must be implemented. The logical ways to implement these proposals is to use them in developing
the annual budget.
4. Decisions with respect to long-term borrowing or other means of capital financing are
made in accordance with the provisions in the municipality's fiscal plan.
Commentary
Frequently, a municipality must finance expensive capital projects via short-term loans and bonded
debt. In planning for the implementation of a multi-year plan, the local government's actions related
to the issuance of debt should be based on those outlined in the plan.
To minimize the cost involved with the debt issuance process, if a municipality does not issue capital
debt on an annual basis, it may opt to fund two or three years' worth of capital projects through one
bond issue or large capital note.
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