Page 55 - City of Bedford FY21 Budget

VII. CAPITAL BUDGET AND PROGRAM

PREPARATION. The City’s capital budget will include all capital project funds and all capital
resources. The budget will be prepared annually. The capital budget will be prepared as directed
by the City Manager with the involvement of all required City departments.

CONTROL. All capital project expenditures must be appropriated in the capital budget. The
Finance Division must certify the availability of resources so any appropriation can be made
before a capital project contract is presented to the Council for approval.

PROGRAM PLANNING. The capital budget will be taken from capital improvement program
plans for future years. The planning time must be at least five years. The replacement and
maintenance for capital items should also be projected for the next five years. Future
maintenance and operational costs will be considered so that these costs can be included in the
operating budget.

FINANCING PROGRAMS. Where applicable, assessments, pro-rata charges, or other fees
should be used to fund capital projects, which have a primary benefit to specific, identifiable
property owners.

Recognizing that long-term debt is usually a more expensive financing method, alternative
financing sources will be explored before debt is issued. When debt is issued, it will be used to
acquire major assets with expected lives that equal or exceed the average life of the debt issue.
The exceptions to this requirement are the traditional costs of marketing and issuing debt,
capitalized labor for design and construction of capital projects, and small component parts
which are attached to major equipment purchases.

INFRASTRUCTURE MAINTENANCE. The City recognizes that deferred maintenance
increases future capital costs. Therefore, a portion of the General Fund and Utility Fund Budgets
will be set aside each year to maintain the quality of the City’s infrastructures.

Replacement schedules should be developed in order to anticipate the inevitable ongoing
obsolescence of infrastructure.

In addition to infrastructure maintenance, the City will plan for the replacement of other assets
such as vehicles and equipment by establishing replacement schedules as needed.

VIII. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS

OPERATIONAL COVERAGE. The City will maintain a balanced budget whereby operating
revenues will be greater than or equal to operating expenditures.

Deferrals, short-term loans, or one-time sources will be avoided as budget balancing techniques.
Reserves will be used only for emergencies or non-recurring expenditures, except when balances
can be reduced because their levels exceed guideline minimums as stated in this policy.

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