Capital Budget
The portion of a city budget dedicated to long-term infrastructure investments like buildings, roads, vehicles, and technology systems.
How It Works
Capital budgets fund assets with useful lives of several years or more. Cities typically fund capital projects through bond issuances, federal grants, or dedicated reserves. The capital improvement plan (CIP) is a multi-year planning document that schedules capital projects. Capital spending is lumpy — it spikes during major construction projects and drops during lean years, unlike the relatively stable operating budget.
Related Terms
- Operating Budget — The portion of a city budget covering recurring, day-to-day expenses like salaries, utilities, supplies, and ongoing program costs.
- Capital Improvement Plan (CIP) — A multi-year planning document that schedules and prioritizes major infrastructure projects — roads, buildings, utilities, and equipment.
- General Obligation Bond (GO Bond) — A municipal bond backed by the full faith, credit, and taxing power of the city — meaning the city pledges to raise taxes if necessary to repay bondholders.
- Revenue Bond — A municipal bond repaid from a specific revenue stream (like water fees or toll road revenue) rather than the city's general taxing power.
About This Definition
This definition is part of the CitySpend Municipal Finance Glossary — 59 terms explaining how city governments fund and manage public services. All definitions are written in plain language for taxpayers, journalists, students, and municipal bond investors.