Operating Budget
The portion of a city budget covering recurring, day-to-day expenses like salaries, utilities, supplies, and ongoing program costs.
How It Works
The operating budget is distinct from the capital budget, which funds long-term infrastructure investments. Operating expenses recur annually and include employee compensation (typically 60-80% of the total), contractual services, materials, and ongoing maintenance. Cities adopt operating budgets annually or biennially. If operating expenses exceed operating revenue, the city runs a structural deficit.
Related Terms
- Capital Budget — The portion of a city budget dedicated to long-term infrastructure investments like buildings, roads, vehicles, and technology systems.
- General Fund — The primary operating fund for a city government, covering most day-to-day services like police, fire, parks, and administration.
- Structural Deficit — A persistent gap where a city's recurring expenses exceed its recurring revenue — meaning the budget is fundamentally unbalanced even in a normal economy.
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.