What constitutes a “capital budget” in municipal finance?

A capital budget in municipal finance is a financial plan that outlines expenditures aimed at long-term investments. This includes funding for infrastructure projects such as roads, bridges, public buildings, and other assets that will last beyond one budget cycle. The purpose of a capital budget is to ensure that funds are allocated effectively to maintain and improve the municipality's physical assets, which can enhance the quality of life for residents and support economic development.

This focus on long-term projects distinguishes the capital budget from an operating budget, which is primarily concerned with day-to-day expenses, such as salaries, utilities, and other recurring costs. By planning for capital expenditures, municipalities can strategically address future needs and allocate resources to projects that will provide benefits over an extended period.