What capital budgeting is and how it works in New Jersey, specifically in Morris County.

1. Capital Budgeting
What it is. How it works.
Morris County Office of Public Information
January 2013

2. Authority
Authority
1
Definitions
Morris County’s Capital Program
Morris County’s Capital Planning Process

3. Authority
Authority
1
Authority to Spend for Capital Projects
• In NJ, a capital budget does not appropriate or
authorize the expenditure of any funds.
• All appropriations are made by:
– An allocation in the current budget; or
– Local ordinances; or
– Ordinances specifying the expenditure and funding
source, which may be the Capital Improvement
Fund, the capital fund balance, or a reserve for a
specific project or improvement.
– Ordinances are adopted by a governing body after
a public hearing.
– Bond ordinances require a super-majority to pass.

4. Definitions
Understanding Budget Terms
• Capital Program
• Capital Plan
• Capital Budget
• Capital Project
• Facilities Committee
• NJ Division of Local Government Services
(DLGS)

5. Definitions
A Capital Program
• Provides a long term outlook.
• Is a multi-year planning tool.
• Is an evolving plan that is responsive to
changing needs and priorities.
• Shows individual projects, slated into a
particular year for planning purposes only.
• By law, must cover a minimum of a six year
period at the county level.
• Does not allocate or appropriate any funds.

6. Definitions
The Capital Plan
• NJ’s “Local Budget Law” requires each
county to adopt a capital plan each year.
• Morris County’s capital plan focuses on
public safety, education, and infrastructure
projects.
• Morris County’s capital plan anticipates
future needs but does not fund them.
2013 2014 2015 2016 2017 2018

7. Definitions
The Capital Budget
• NJ’s “Local Budget Law” requires each
county to adopt a capital budget each year.
• Every county uses the same budget format,
designed by DLGS. The capital budget starts on
sheet 39.
• The capital budget is the first, or current year, of
a capital program.
• A capital budget will contain
various anticipated capital
projects.

8. Definitions
Capital Projects
• Individual capital projects make up the capital
budget.
• Examples of capital projects include:
– Road and bridge improvements
– Park improvements and renovations, including
design and construction of new recreational facilities
– Building improvements, construction (including
County College of Morris, MC School of Technology,
as well as various County buildings)
• Capital projects must have a useful life of 5
years or more.
• The maximum useful life is 40 years.

9. Definitions
Facilities Review Committee
• Membership includes 3 Freeholders and
county staff
• Meetings are held monthly
• Reviews details of current projects, including
on-site visits
• Reviews six-year program and long range
project scheduling
• Reviews and monitors capital ordinance
schedule for the year

10. Definitions
Division of Local Government Services
• Provides technical and financial assistance to
local governments in budgeting, financial
reporting, joint services, purchasing, and
management issues.
• Responsible for the financial integrity of all
local government units.
• Reviews and approves all municipal, county
and fire district budgets.

11. Morris County’s Capital Program
Capital Management: A Full Year of
Planning, Budgeting, Purchasing
Facilities Committee sets Department heads, Constitutional Officers, and
capital budget target agencies submit requests (needs and wants)
Facilities Committee reviews and Staff prepares spreadsheet for
makes recommendations Facilities Committee review
Facilities Committee presents proposed Facilities Committee presents capital budget to
capital budget to Budget Subcommittee Freeholder Board for approval (vote)
Facilities Committee/Staff develop Capital budget is combined with operating budget for
capital ordinance schedule (vote) introduction, public hearing, approval (vote)
Ordinances introduced per the schedule Facilities Committee monitors capital projects and
for public hearing / adoption (vote) budget throughout the year.
Process begins again for next year’s capital program

12. Morris County’s Capital Program
The Importance of our Capital Program
The objective of a capital program is to
give a clear picture of future capital
requirements, the cost of all projects, the
methods of financing them and the ability
of the county to pay for these projects.

13. Morris County’s Capital Program
The Importance of our Capital Program
A good plan is
• It enhances the likelihood that Morris County will
like a road map:
it shows the final
continue to obtain a AAA bond rating, which results in
destination and lowered borrowing costs and savings to Morris County
usually the best
way to get there. taxpayers.
H. Stanley Judd • It shows a sound, consistent program of improvement
American Author
in Morris County, which encourages the investment of
private capital.
• It expands our opportunities to participate in both
Federal and State grant programs.

14. Morris County’s Capital Program
The Importance of our Capital Program
• It provides an opportunity to evaluate capital projects in
light of the county’s ability to pay.
• It assists in maintaining financial stability by distributing
expenditures evenly over a period of time, thus
avoiding major fluctuations in the tax rate.
• It eliminates the need to consider otherwise routine
projects on an emergency basis.
• It avoids conflicts between projects proposed by
different agencies.

15. Morris County’s Capital Program
The Importance of our Capital Program
• It allows for orderly implementation of the public
improvement portion of the comprehensive plan,
without the imposition of unreasonable financial
burdens.
• It assures maximum utilization and efficient usage of
equipment and other resources through the elimination
of scheduling and resource conflicts.
• It lengthens project lead time, avoiding last minute
delays due to design, negotiation, acquisition, or other
related matters.

16. Morris County’s Capital Program
Elements of a Capital Budget
• The capital budget contains:
– The project title
– Estimated total cost
– Funding amounts reserved in prior years
– Planned funding sources for the project
• Possibilities: operating budget, capital
improvement fund, capital fund balance,
grants, future year funding

17. Morris County’s Capital Program
Capital Budget Modifications
What if priorities change during the year?
If a bond ordinance is necessary, then
• The capital budget must be amended
• Amendments must be on forms prescribed by
the DLGS
• The bond ordinance must be approved by the
governing body after a public hearing.

18. Morris County’s Capital Planning Process
Capital Management: A Full Year of
Planning, Budgeting, Purchasing
Facilities Committee sets Department heads, Constitutional Officers, and
capital budget target agencies submit requests (needs and wants)
Facilities Committee reviews and Staff prepares spreadsheet for
makes recommendations Facilities Committee review
Facilities Committee presents proposed Facilities Committee presents capital budget to
capital budget to Budget Subcommittee Freeholder Board for approval (vote)
Facilities Committee/Staff develop Capital budget is combined with operating budget for
capital ordinance schedule (vote) introduction, public hearing, approval (vote)
Ordinances introduced per the schedule Facilities Committee monitors capital projects and
for public hearing / adoption (vote) budget throughout the year.
Process begins again for next year’s capital program

19. Other AAA Counties (35 total)
Loudon County VA www.loudoun.gov/
Weber County UT www.co.weber.ut.us/
Washington County MN www.co.washington.mn.us/
Arlington County VA www.arlingtonva.us/
Oakland County MI www.oakgov.com/
Travis County TX www.co.travis.tx.us/
Henrico County VA www.co.henrico.va.us/
Hillsborough County FL www.hillsboroughcounty.org/
King County WA www.kingcounty.gov/
Prince William County VA www.pwcgov.org/
Frederick County MD www.frederickcountymd.gov/

20. For more information….
Contact the
Morris County
Administrator’s Office
AdministratorsOffice@co.morris.nj.us
(973) 285-6040