Chapter 4 Overview
In addition to the personnel services and support services potion of the budget is the capital outlay portion. It is this portion that monies for needed “equipment” is found within the budget. Some states allow for “construction projects” to also be included in this section of the budget, however Florida is not one of those states. The laws vary from state to state as to the definition of “equipment” within public organizations. Equipment purchased under this portion of the budget is almost always placed on the agency’s inventory and assigned a property control number. Obviously this is the means whereby equipment is both managed and accounted for in public agencies. When equipment is no longer needed by the agency, it is either sold at public auction, or disposed of in accordance with law. Strict records should always be kept of all equipment under the control of any public agency.
Chapter Four Lecture
In this module we will be examining the Capital Outlay portion of the budget. Monies allocated for this portion of the budget vary based upon the agency or government entity preparing the budget. The power point provided for this module discusses monies allocated to this portion of the budget may include such things as construction costs for new buildings. Other areas of the power point discuss monies allocated to this portion of the budget are allocated for equipment.
The difference can be found in the government entity preparing the budget. Let’s take a look at the local level of government, county or city. In the United States counties and cities have a governing body called the Council or Commission. This governing body is known as the legislative branch of that local government. Local agencies, such as the police department, sheriff’s office, building and zoning, etc. do not place it their budgets under the capital expenditure portion construction for new buildings or purchasing land. This would be done at the county or city level within the overall county or city budget. Local agencies only budget for equipment in this category which is (in Florida) a single item having a life expectancy of a year or more and costing one thousand dollars or more.
All buildings and properties are owned by the governing body, not individual agencies under the governing body. The governing body is responsible for providing adequate office space, including buildings, to the agencies under its jurisdiction. The county must provide for the construction of a county jail. Any item within the county jail that was required for a certificate of occupancy, such as a hot water heater, also comes under the jurisdiction. On the other hand, an item within the jail not required for a certificate of occupancy, such as an industrial mashed potato mixer, would be the budgeting responsibility of the agency head operating the jail. This can become quite complicated for local officials, but the easy rule to follow is whoever places the property inventory control number on the equipment becomes the party responsible for including it in its budget.
The power point also mentions bond issues. Local governments are empowered to purchase land, buy and/or construct buildings for the governments operation. The purchase must take place in the fiscal year. To do this, since it is a rather large amount of money, often secure bonds where that particular government pays the bond holder so much a year until the amount of the bond is satisfied. Some local sports stadiums are funded in this manner.
On the local agency level, there is another form of revenue used to fund equipment. This is known as impact fee funding. Generally when one builds a new building or house a fee is attached whereby those monies go into a pot for the use of purchase of any new equipment necessary to cover new growth in that particular jurisdiction. For example, if the police chief needs to add 2 new patrol officers due to increased growth in the city, the patrol cars for these officers can be funded from the impact fee fund. In this case the chief would ask for these cars in his/her budget and the city would fund the vehicles from the impact fees instead of other forms of taxation.
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