2017 Capital Budget Presentation

 

In NJ, a capital budget does not appropriate or authorize the expenditure of any funds. New Jersey’s “Local Budget Law” requires each county to adopt a capital plan each year. Morris County’s capital plan focuses on public safety, education, and infrastructure projects. Morris County’s capital plan anticipates future needs but does not fund them.

The six-year capital plan, as a policy and priority document, is voted on by the Freeholders. It is formally adopted again, each year, by a vote of the Freeholders when they adopt the annual budget. To fund capital projects, Freeholders vote to introduce capital ordinances at a public meeting. A notice of the public hearing on an ordinance is published in the newspaper. The public hearing is held, after which the Freeholders vote on to adopt (or not) that ordinance. Only then, after input from the public and multiple Freeholder votes, can capital projects move forward.

AAA Bond Rating

Out of 3,068 counties nationwide, Morris County is one of only 35 counties that holds the prestigious, and taxpayer beneficial, AAA bond rating. Financial risk is a significant factor in determining interest rates when local governments need to borrow money for needed capital projects. When a person buys a new home, the mortgage interest rate will be lower for those with higher credit scores. A lower mortgage interest rate translates to less total interest paid over the life of the loan. Bond ratings for government operate the same way. A higher bond rating means less interest over the life of the bond, or borrowing, for the local government.

Why a AAA bond rating is important for Morris County

  • AAA is the highest rating possible.
  • AAA means Morris County is financially strong and will be able to pay its debt.
  • AAA encourages investors to buy our bonds and to invest in Morris County. AAA means their investment is safe.
  • AAA bond ratings results in lower interest rates for borrowing.
  • Lower borrowing rates mean Morris County taxpayers pay less for necessary capital projects.

Freeholder Facilities Subcommittee

The Freeholder facilities subcommittee meets at least monthly throughout the year, more frequently during capital budget preparation. The committee reviews details of current projects and makes on-site visits, where necessary, to ensure that capital projects are completed in the most efficient and cost effective way possible. It reviews the six-year program and long range project scheduling to maximize efficiencies and effective staff / resource utilization. It reviews and monitors the capital ordinance schedule throughout the year. The facilities subcommittee includes three Freeholders and county administrative staff. Various department heads and staff members are called upon to participate as needed.

View a presentation about how the Capital Budget works.

The Capital Budget Preparation Process

  1. The Freeholder Facilities Committee sets the capital budget target for the upcoming year
  2. Department heads, Constitutional Officers, and agencies submit requests (needs and wants)
  3. County staff prepares a spreadsheet of capital requests for Facilities Committee review
  4. The Facilities Committee reviews and makes recommendations
  5. The Facilities Committee presents the proposed capital budget to the Freeholder Budget Subcommittee
  6. The Facilities Committee presents capital budget to the entire Freeholder Board for approval. Freeholders vote on this.
  7. The capital budget is combined with the operating budget for introduction. A public hearing is held, and a Freeholder vote is taken on the entire budget.
  8. A capital ordinance schedule is developed and approved.
  9. Ordinances are introduced per the schedule for public hearing / adoption. Freeholders vote on these.
  10. The Facilities Committee monitors capital projects and budget throughout the year.
  11. The process begins again for the following year’s capital program

The Importance of Capital Budgeting

  • It enhances the likelihood that Morris County will continue to obtain a AAA bond rating, which results in lowered borrowing costs and savings to Morris County taxpayers.
  • It shows a sound, consistent program of improvement in Morris County, which encourages the investment of private capital.
  • It expands our opportunities to participate in both Federal and State grant programs.
  • It provides an opportunity to evaluate capital projects in light of the county’s ability to pay.
  • It assists in maintaining financial stability by distributing expenditures evenly over a period of time, thus avoiding major fluctuations in the tax rate.
  • It eliminates the need to consider otherwise routine projects on an emergency basis.
  • It avoids conflicts between projects proposed by different agencies.
  • It allows for orderly implementation of the public improvement portion of the comprehensive plan, without the imposition of unreasonable financial burdens.
  • It assures maximum utilization and efficient usage of equipment and other resources through the elimination of scheduling and resource conflicts.
  • It lengthens project lead time, avoiding last minute delays due to design, negotiation, acquisition, or other related matters.