Capital Budgeting

Capital Budgeting

Brenda Armstead

PPA603: Government Budgeting (MGB524DS)

Instructor: Dr. Regis Chapman

July 13, 2015

Introduction:

According to Lee el at (2008), “Three main factors influence debt capacity: expenditure pressures, resource availability, and the commitment of governmental officials to use resources to meet debt requirements. Assessing resource availability involves analyzing all potential sources of revenue including own-source revenues; transfers from other levels of government; and types of self-financing including user charges, special assessments, impact fees, and a variety of other measures to collect fees or revenues sufficient to support the specific project or facility. Expenditure analysts look at the present and potential future commitments of jurisdictions. Population growth, changing economic conditions, the state of the current capital facilities and infrastructure base, and the socioeconomic characteristics of the population are important influences on potential future expenditures. Fiscal capacity analysis, focusing on the ability to generate revenues, and on expenditure needs, is used to determine present fiscal conditions and estimate future conditions” (P. 555).

Discuss how the debt capacity of a governmental entity is determined:

“Within the FY2015 budget document are defined explanations of any changes from FY2014. Equally important as the aforesaid statement are the estimated revenues derived from taxes and various other sources, which is inclusive of the current tax rate structure and the valuation of properties for FY2015. Additionally, an itemization of proposed expenses by all municipal agencies is juxtaposed to previous FY actual expenses and current year-to-date (YTD) expenses. Further, there is an account of all outstanding debt service, as well as any capital expenditures that will increase the bond indebtedness for FY2015. These capital improvement projects are categorized and...