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Capital Budgeting Select a government agency (local/state/federal) and develop a four- to five-
page APA-style paper summarizing the following: Explain how the debt capacity of the
governmental entity is determined. Evaluate the effect of refunding or reorganizing existing debt
obligations. Analyze various funding alternatives that can be used to support debt obligations.
Your paper must be four to five pages (not including title and reference pages) and must be
formatted according to APA style as outlined in the approved APA style guide. You must cite at
least three scholarly sources in addition to the textbook.
Solution
The ability of any government entity to generate revenue from its economy underlie the
government's debt capacity.
GFOA (Government Finance Officers Association) determine its debt capacity through five steps
methodology which includes the following:
(1) defining the scope of analysis,
(2) peer group development,
(3)analysis of current position,
(4) scenario analysis, and
(5) financial policy development.
Along with debts various other sources that could be used for funding includesales and use tax,
property taxes, reserves etc.

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