Incorporating the Capital Budget into the Budget Document Background. Once a government has adopted a multiyear capital plan, the next step is to incorporate the capital budget into the budget document. Capital projects are different from other programs adopted in the operating budget, often representing very large financial obligations that may span two or more fiscal years. Because of the unique nature of capital projects, the presentation may differ from other items within the budget document. Recommendation. GFOA recommends that governments prepare and adopt a formal capital budget as part of their annual or biennial budget process. The capital budget should be directly linked to the multi-year capital improvement plan. Presentation of the capital budget should include a summary of the multi-year capital plan as well as detailed information related to the budget year (or both budget years for biennial budgets). Each government will need to establish the appropriate balance between summary-level and detailed information. To avoid placing excessive detail in the capital section of the budget document, consideration may be given to placing the
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additional information on the web or in a separate capital document. Governments should use the following guidelines when incorporating information on the capital budget within the budget document. 1. Definition. A definition of capital expenditures should be included in the budget document. The definition of a capital project can be designed in a way that is broad enough to encompass a variety of different situations. Governments frequently refer to asset life and dollar threshold in the capital expenditures definition. 2. Placement. The capital budget should be in a distinct section of the budget document. It is very difficult to follow the various elements of the capital program if information is scattered throughout the document. Having the capital budget and multi-year capital plan within the same or adjacent sections of the document makes it easier to follow that relationship.
SOUTH DAKOTA MUNICIPALITIES
