An a-to-z guide on capital budgeting and finance.

• Author: Lun, Nicole
• Position: The Bookshelf - Book Review

Capital Budgeting and Finance: A Guide for Local Governments

Published by the International City/County Management Association (800) 754-8780 bookstore.icma.org 2004;424 pages: $65.00

Capital projects are large, expensive, and lengthy undertakings that require careful planning and execution. Unfortunately, most public finance books dedicate only a couple of chapters to capital budgeting and debt management. Thanks to a new addition to ICMA's vast library of resources on local government management, public administrators now have a more comprehensive treatment of this important topic.

Written by veteran public finance scholar A. John Vogt, Capital Budgeting and Finance: A Guide for Local Governments provides comprehensive, detailed, and practical information for small- and medium-size local governments about how to plan and finance capital projects. Much of the material is drawn from current practices and methods in the field. The book is written primarily for local government managers and finance professionals, but can be a useful resource for anyone who wants to become more informed in this area.

Vogt points out that capital planning and budgeting is central to many aspects of a community's development, and that local governments risk serious consequences if they do not make wise capital investment decisions. The book does not recommend certain practices over others, but does provide excellent explanations of each step in the process. Both small- and medium-sized jurisdictions will find that Capital Budgeting and Finance is relevant to their needs and constraints.

The first four chapters of the book concentrate on capital budgeting. These chapters explain the rationale behind capital budgeting, provide a general model of the capital budgeting process, illustrate the basic structure of a capital improvement program, and describe several approaches for prioritizing capital projects. Vogt offers useful guidance on how to prepare a capital improvement program and the issues involved in obtaining the approval of the community and the local governing board. The book also describes various approaches for prioritizing capital projects, ranging from familiar yet often insufficient experience-based judgments to more rigorous weighted rating systems.

The last eight chapters of the book are devoted to capital financing strategy and debt. According to Vogt, a capital financing strategy should strive to achieve three goals: (1) minimize the cost of...