Discussion: Financing a Capital Budget

Discussion: Financing a Capital Budget

When planning for capital projects and purchases, criminal justice administrators must first decide if the project or purchase is outside of the agency’s standard operating budget. This may be determined by looking at the government’s capitalization policies. The policy will likely indicate a specific dollar amount that requires the need for a capital budget request. For example, costly equipment, such as a police car, requires a capital budget request, while equipment such as a personal computer may be included in the operating budget. Most state and federal governments have limited resources for capital improvements; thus, capital budgets may be subject to more scrutiny than operating budgets. In times of budget shortfalls, capital improvements are typically the first items cut from the budget. Consequently, an alternative means of funding may be needed to pursue a capital project or purchase.

To prepare for this Discussion:

  • Review Chapter 4 in your course text, The Basics of Public Budgeting and Financial Management, and think about various methods used to finance a capital project.
  • Review the “Understanding New York City’s Budget” document and take note of the components of a capital budget. Also, consider capital financing and other budget basics related to capital budgets.
  • Review the video segment “Capital Budgets” and think about items that might be included in a capital budget to finance a capital project.
  • Think about a capital project related to criminal justice underway in your community such as the construction of a new police station or a new courthouse, or the purchase of new police cars.
  • Select a capital project to use for this Discussion.
  • Consider two possible methods to finance the project.
  • Think about advantages and disadvantages of the two methods of financing that you selected.

With these thoughts in mind:

Post a brief description of the capital project you selected. Then describe two methods of financing that might be used for the project. Finally, explain one advantage and one disadvantage of each method.

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