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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Capital Planning and Budgeting: A Tutorial for Local Government Officials

Module 1 - The Capital Improvement Plan

More on Creating the Capital Improvement Plan

Planners should verify estimated costs assigned to these projects through discussions with department heads, purchasing officers, banks, engineers, potential vendors, state agencies, and other local governments. Once accurate price tags have been attached to each project, funding availability becomes a factor for prioritizing these projects. All financing sources - State, federal, local and borrowed - should be determined for the next year and beyond. If some of the projects will require the use of in-house labor, then staff workloads will also have to be scheduled into the capital plan. Out-year estimates may be imprecise, but they will allow the decision-makers to have an overall sense of funding needs. As projects move closer to implementation, estimates can be refined to more accurately reflect project costs.

The typical plan will list each capital asset along with its replacement cost, ideally adjusted for inflation, and expected lifetime. The effective annual cost of the asset can be calculated by dividing its replacement cost by the number of years it is expected to be in service. Adding the annualized costs for all assets will then determine the amount that needs to be considered for asset replacement during each year of the capital plan.

After the plan details are in order, the governing body should seek public input and formally adopt the capital plan. The board should revisit the plan annually as a part of the budget process and make necessary adjustments, and monitor the plan over time to determine how well the goals and objectives are being achieved.

  Next: Module 2 - The Capital Budget