Page 178 - Saginaw FY22 Adopted Annual Budget

CITY OF SAGINAW
CAPITAL PROJECTS FUND OVERVIEW

2021-2022

The capital projects budget can impact the operating budget in several ways. Capital
projects funded by the issuance of debt will impact the debt service portion of the tax rate.
The City schedules debt issuances to have as little impact on the tax rate as possible. Debt
payments are scheduled so that an increase as a result of new debt will be offset as older
debt is paid off. By stabilizing the debt portion of the tax rate, the operations and
maintenance portion of the tax rate can be maintained by not having to shift tax revenues
from operations to debt service. Funding sources other than issuing debt are used when
possible to minimize the debt related impact on the operating budget.

With the exception of the upcoming Bailey Boswell overpass, the focus of the Capital
Projects Budget has been maintaining, upgrading, and replacing current infrastructure.
Generally capital projects that have replaced aging infrastructure create an indirect savings
to the operating budget by reducing the resources necessary to keep the aging infrastructure
in good operating codition. For example the replacement of aging water and wastewater
lines may result in an operating savings of materials and staff hours that would be called out
to fix an aging line that has a leak or break. These types of savings do not result in an
operating budget surplus as the resources saved are directed to other aging infrastructure
requiring maintenance.

As new facilities are proposed, the resulting increase in personnel and other operating costs
are evaluated in addition to the cost to build the facility. These types of projects are
considered in their entirety and must be approved and funded in both the operating and
capital projects budget.

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