What is a Capital Improvements Program?
A capital improvements program (CIP) is a blueprint for planning a community’s capital expenditures and is one of the most important responsibilities of local government officials. It coordinates community planning, financial capacity and physical development.
A capital improvements program is composed of two parts — a capital budget and a capital program. The capital budget is the upcoming year’s spending plan for capital items (tangible assets or projects that cost at least $5,000 and have a useful life of at least five years). The capital program is a plan for capital expenditures that extends five years beyond the capital budget. Development of a CIP that will insure sound fiscal and capital planning requires effective leadership and the involvement and cooperation of all municipal departments. For that reason, this manual places responsibility for overseeing the CIP process with a community’s chief executive, the Board of Supervisors, which appoints a CIP Committee. The Committee begins the CIP process by forwarding its recommended capital budget and program to the Supervisors.
The Supervisors review the proposal and make their recommendations in a Township Meeting for adoption.
A complete, properly developed CIP has the following benefits:
- Facilitates coordination between capital needs and the operating budgets.
- Enhances the community’s credit rating, control of its tax rate, and avoids sudden changes in its debt service requirements.
- Identifies the most economical means of financing capital projects.
- Increases opportunities for obtaining federal and state aid.
- Relates public facilities to other public and private development and redevelopment policies and plans.
- Focuses attention on community objectives and fiscal capacity.
- Keeps the public informed about future needs and projects.
- Coordinates the activities of neighboring and overlapping units of local government to reduce duplication.
- Encourages careful project planning and design to avoid costly mistakes and help a community reach desired goals.