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Capital Budgeting
What it is. How it works.


                            Morris County Office of Public Information
                                                        January 2013
Authority
    Authority
1


    Definitions


    Morris County’s Capital Program


    Morris County’s Capital Planning Process
Authority
                 Authority
             1


Authority to Spend for Capital Projects
• In NJ, a capital budget does not appropriate or
  authorize the expenditure of any funds.
• All appropriations are made by:
   – An allocation in the current budget; or
   – Local ordinances; or
   – Ordinances specifying the expenditure and funding
     source, which may be the Capital Improvement
     Fund, the capital fund balance, or a reserve for a
     specific project or improvement.
   – Ordinances are adopted by a governing body after
     a public hearing.
   – Bond ordinances require a super-majority to pass.
Definitions



Understanding Budget Terms
• Capital Program
• Capital Plan
• Capital Budget
• Capital Project
• Facilities Committee
• NJ Division of Local Government Services
  (DLGS)
Definitions



A Capital Program
• Provides a long term outlook.
• Is a multi-year planning tool.
• Is an evolving plan that is responsive to
  changing needs and priorities.
• Shows individual projects, slated into a
  particular year for planning purposes only.
• By law, must cover a minimum of a six year
  period at the county level.
• Does not allocate or appropriate any funds.
Definitions



       The Capital Plan
       • NJ’s “Local Budget Law” requires each
         county to adopt a capital plan each year.
       • Morris County’s capital plan focuses on
         public safety, education, and infrastructure
         projects.
       • Morris County’s capital plan anticipates
         future needs but does not fund them.



2013    2014        2015        2016      2017          2018
Definitions



The Capital Budget
• NJ’s “Local Budget Law” requires each
  county to adopt a capital budget each year.
• Every county uses the same budget format,
  designed by DLGS. The capital budget starts on
  sheet 39.
• The capital budget is the first, or current year, of
  a capital program.
                 •   A capital budget will contain
                     various anticipated capital
                     projects.
Definitions



Capital Projects
• Individual capital projects make up the capital
  budget.
• Examples of capital projects include:
   – Road and bridge improvements
   – Park improvements and renovations, including
     design and construction of new recreational facilities
   – Building improvements, construction (including
     County College of Morris, MC School of Technology,
     as well as various County buildings)
• Capital projects must have a useful life of 5
  years or more.
• The maximum useful life is 40 years.
Definitions


Facilities Review Committee
• Membership includes 3 Freeholders and
  county staff
• Meetings are held monthly
• Reviews details of current projects, including
  on-site visits
• Reviews six-year program and long range
  project scheduling
• Reviews and monitors capital ordinance
  schedule for the year
Definitions



Division of Local Government Services
• Provides technical and financial assistance to
  local governments in budgeting, financial
  reporting, joint services, purchasing, and
  management issues.
• Responsible for the financial integrity of all
  local government units.
• Reviews and approves all municipal, county
  and fire district budgets.
Morris County’s Capital Program


               Capital Management: A Full Year of
               Planning, Budgeting, Purchasing
      Facilities Committee sets                       Department heads, Constitutional Officers, and
        capital budget target                          agencies submit requests (needs and wants)


   Facilities Committee reviews and                           Staff prepares spreadsheet for
       makes recommendations                                    Facilities Committee review


Facilities Committee presents proposed                Facilities Committee presents capital budget to
capital budget to Budget Subcommittee                       Freeholder Board for approval (vote)


  Facilities Committee/Staff develop               Capital budget is combined with operating budget for
   capital ordinance schedule (vote)                   introduction, public hearing, approval (vote)


Ordinances introduced per the schedule               Facilities Committee monitors capital projects and
  for public hearing / adoption (vote)                           budget throughout the year.



                         Process begins again for next year’s capital program
Morris County’s Capital Program



The Importance of our Capital Program

The objective of a capital program is to
give a clear picture of future capital
requirements, the cost of all projects, the
methods of financing them and the ability
of the county to pay for these projects.
Morris County’s Capital Program



                     The Importance of our Capital Program
A good plan is
                     •   It enhances the likelihood that Morris County will
like a road map:
it shows the final
                         continue to obtain a AAA bond rating, which results in
destination and          lowered borrowing costs and savings to Morris County
usually the best
way to get there.        taxpayers.

 H. Stanley Judd     •   It shows a sound, consistent program of improvement
 American Author
                         in Morris County, which encourages the investment of
                         private capital.

                     •   It expands our opportunities to participate in both
                         Federal and State grant programs.
Morris County’s Capital Program



The Importance of our Capital Program
•   It provides an opportunity to evaluate capital projects in
    light of the county’s ability to pay.

•   It assists in maintaining financial stability by distributing
    expenditures evenly over a period of time, thus
    avoiding major fluctuations in the tax rate.

•   It eliminates the need to consider otherwise routine
    projects on an emergency basis.

•   It avoids conflicts between projects proposed by
    different agencies.
Morris County’s Capital Program



The Importance of our Capital Program
•   It allows for orderly implementation of the public
    improvement portion of the comprehensive plan,
    without the imposition of unreasonable financial
    burdens.

•   It assures maximum utilization and efficient usage of
    equipment and other resources through the elimination
    of scheduling and resource conflicts.

•   It lengthens project lead time, avoiding last minute
    delays due to design, negotiation, acquisition, or other
    related matters.
Morris County’s Capital Program



Elements of a Capital Budget
• The capital budget contains:
  –   The project title
  –   Estimated total cost
  –   Funding amounts reserved in prior years
  –   Planned funding sources for the project
       • Possibilities: operating budget, capital
         improvement fund, capital fund balance,
         grants, future year funding
Morris County’s Capital Program



Capital Budget Modifications
What if priorities change during the year?
If a bond ordinance is necessary, then
• The capital budget must be amended
• Amendments must be on forms prescribed by
  the DLGS
• The bond ordinance must be approved by the
  governing body after a public hearing.
Morris County’s Capital Planning Process


               Capital Management: A Full Year of
               Planning, Budgeting, Purchasing
      Facilities Committee sets                       Department heads, Constitutional Officers, and
        capital budget target                          agencies submit requests (needs and wants)


   Facilities Committee reviews and                           Staff prepares spreadsheet for
       makes recommendations                                    Facilities Committee review


Facilities Committee presents proposed                Facilities Committee presents capital budget to
capital budget to Budget Subcommittee                       Freeholder Board for approval (vote)


  Facilities Committee/Staff develop               Capital budget is combined with operating budget for
   capital ordinance schedule (vote)                   introduction, public hearing, approval (vote)


Ordinances introduced per the schedule               Facilities Committee monitors capital projects and
  for public hearing / adoption (vote)                           budget throughout the year.



                         Process begins again for next year’s capital program
Other AAA Counties (35 total)
         Loudon County VA     www.loudoun.gov/

          Weber County UT     www.co.weber.ut.us/

    Washington County MN      www.co.washington.mn.us/

        Arlington County VA   www.arlingtonva.us/

         Oakland County MI    www.oakgov.com/

          Travis County TX    www.co.travis.tx.us/

         Henrico County VA    www.co.henrico.va.us/

     Hillsborough County FL   www.hillsboroughcounty.org/

           King County WA     www.kingcounty.gov/

   Prince William County VA   www.pwcgov.org/

       Frederick County MD    www.frederickcountymd.gov/
For more information….

        Contact the
       Morris County
     Administrator’s Office

 AdministratorsOffice@co.morris.nj.us
           (973) 285-6040

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Learn About the Morris County NJ Capital Budget

  • 1. Capital Budgeting What it is. How it works. Morris County Office of Public Information January 2013
  • 2. Authority Authority 1 Definitions Morris County’s Capital Program Morris County’s Capital Planning Process
  • 3. Authority Authority 1 Authority to Spend for Capital Projects • In NJ, a capital budget does not appropriate or authorize the expenditure of any funds. • All appropriations are made by: – An allocation in the current budget; or – Local ordinances; or – Ordinances specifying the expenditure and funding source, which may be the Capital Improvement Fund, the capital fund balance, or a reserve for a specific project or improvement. – Ordinances are adopted by a governing body after a public hearing. – Bond ordinances require a super-majority to pass.
  • 4. Definitions Understanding Budget Terms • Capital Program • Capital Plan • Capital Budget • Capital Project • Facilities Committee • NJ Division of Local Government Services (DLGS)
  • 5. Definitions A Capital Program • Provides a long term outlook. • Is a multi-year planning tool. • Is an evolving plan that is responsive to changing needs and priorities. • Shows individual projects, slated into a particular year for planning purposes only. • By law, must cover a minimum of a six year period at the county level. • Does not allocate or appropriate any funds.
  • 6. Definitions The Capital Plan • NJ’s “Local Budget Law” requires each county to adopt a capital plan each year. • Morris County’s capital plan focuses on public safety, education, and infrastructure projects. • Morris County’s capital plan anticipates future needs but does not fund them. 2013 2014 2015 2016 2017 2018
  • 7. Definitions The Capital Budget • NJ’s “Local Budget Law” requires each county to adopt a capital budget each year. • Every county uses the same budget format, designed by DLGS. The capital budget starts on sheet 39. • The capital budget is the first, or current year, of a capital program. • A capital budget will contain various anticipated capital projects.
  • 8. Definitions Capital Projects • Individual capital projects make up the capital budget. • Examples of capital projects include: – Road and bridge improvements – Park improvements and renovations, including design and construction of new recreational facilities – Building improvements, construction (including County College of Morris, MC School of Technology, as well as various County buildings) • Capital projects must have a useful life of 5 years or more. • The maximum useful life is 40 years.
  • 9. Definitions Facilities Review Committee • Membership includes 3 Freeholders and county staff • Meetings are held monthly • Reviews details of current projects, including on-site visits • Reviews six-year program and long range project scheduling • Reviews and monitors capital ordinance schedule for the year
  • 10. Definitions Division of Local Government Services • Provides technical and financial assistance to local governments in budgeting, financial reporting, joint services, purchasing, and management issues. • Responsible for the financial integrity of all local government units. • Reviews and approves all municipal, county and fire district budgets.
  • 11. Morris County’s Capital Program Capital Management: A Full Year of Planning, Budgeting, Purchasing Facilities Committee sets Department heads, Constitutional Officers, and capital budget target agencies submit requests (needs and wants) Facilities Committee reviews and Staff prepares spreadsheet for makes recommendations Facilities Committee review Facilities Committee presents proposed Facilities Committee presents capital budget to capital budget to Budget Subcommittee Freeholder Board for approval (vote) Facilities Committee/Staff develop Capital budget is combined with operating budget for capital ordinance schedule (vote) introduction, public hearing, approval (vote) Ordinances introduced per the schedule Facilities Committee monitors capital projects and for public hearing / adoption (vote) budget throughout the year. Process begins again for next year’s capital program
  • 12. Morris County’s Capital Program The Importance of our Capital Program The objective of a capital program is to give a clear picture of future capital requirements, the cost of all projects, the methods of financing them and the ability of the county to pay for these projects.
  • 13. Morris County’s Capital Program The Importance of our Capital Program A good plan is • It enhances the likelihood that Morris County will like a road map: it shows the final continue to obtain a AAA bond rating, which results in destination and lowered borrowing costs and savings to Morris County usually the best way to get there. taxpayers. H. Stanley Judd • It shows a sound, consistent program of improvement American Author in Morris County, which encourages the investment of private capital. • It expands our opportunities to participate in both Federal and State grant programs.
  • 14. Morris County’s Capital Program The Importance of our Capital Program • It provides an opportunity to evaluate capital projects in light of the county’s ability to pay. • It assists in maintaining financial stability by distributing expenditures evenly over a period of time, thus avoiding major fluctuations in the tax rate. • It eliminates the need to consider otherwise routine projects on an emergency basis. • It avoids conflicts between projects proposed by different agencies.
  • 15. Morris County’s Capital Program The Importance of our Capital Program • It allows for orderly implementation of the public improvement portion of the comprehensive plan, without the imposition of unreasonable financial burdens. • It assures maximum utilization and efficient usage of equipment and other resources through the elimination of scheduling and resource conflicts. • It lengthens project lead time, avoiding last minute delays due to design, negotiation, acquisition, or other related matters.
  • 16. Morris County’s Capital Program Elements of a Capital Budget • The capital budget contains: – The project title – Estimated total cost – Funding amounts reserved in prior years – Planned funding sources for the project • Possibilities: operating budget, capital improvement fund, capital fund balance, grants, future year funding
  • 17. Morris County’s Capital Program Capital Budget Modifications What if priorities change during the year? If a bond ordinance is necessary, then • The capital budget must be amended • Amendments must be on forms prescribed by the DLGS • The bond ordinance must be approved by the governing body after a public hearing.
  • 18. Morris County’s Capital Planning Process Capital Management: A Full Year of Planning, Budgeting, Purchasing Facilities Committee sets Department heads, Constitutional Officers, and capital budget target agencies submit requests (needs and wants) Facilities Committee reviews and Staff prepares spreadsheet for makes recommendations Facilities Committee review Facilities Committee presents proposed Facilities Committee presents capital budget to capital budget to Budget Subcommittee Freeholder Board for approval (vote) Facilities Committee/Staff develop Capital budget is combined with operating budget for capital ordinance schedule (vote) introduction, public hearing, approval (vote) Ordinances introduced per the schedule Facilities Committee monitors capital projects and for public hearing / adoption (vote) budget throughout the year. Process begins again for next year’s capital program
  • 19. Other AAA Counties (35 total) Loudon County VA www.loudoun.gov/ Weber County UT www.co.weber.ut.us/ Washington County MN www.co.washington.mn.us/ Arlington County VA www.arlingtonva.us/ Oakland County MI www.oakgov.com/ Travis County TX www.co.travis.tx.us/ Henrico County VA www.co.henrico.va.us/ Hillsborough County FL www.hillsboroughcounty.org/ King County WA www.kingcounty.gov/ Prince William County VA www.pwcgov.org/ Frederick County MD www.frederickcountymd.gov/
  • 20. For more information…. Contact the Morris County Administrator’s Office AdministratorsOffice@co.morris.nj.us (973) 285-6040

Editor's Notes

  1. This needs bullets: who is on it; how often they meet; what they do; long range vision