From the Director – A Capital Idea
A capital plan is a long-term guide for big investments like buildings, roads, equipment, and land, and could well be a fiscal survival tool for towns. The WRC will be promoting capital planning as a fiscal management best practice, budgeting for hazard mitigation and disaster recovery, and a pathway towards greater self-reliance in an era of reduced federal and state aid and increasing costs. All signs are pointing towards towns having to have greater reliance upon themselves and their taxpayers to fund basic needs. A capital plan creates a strategy to do just that.
The Vermont League of Cities and Towns is a great resource for capital planning support, and I’m going to shamelessly share here their points on what’s in it for towns and taxpayers.
What Capital Planning Does for Taxpayers
- Saves Money Over Time: Planning helps towns buy and repair things at the right time, avoid emergency repairs, and get better interest rates when borrowing.
- Protects What You’ve Paid For: Roads, buildings, and equipment don’t last forever. Capital planning makes sure they’re repaired or replaced before they fail.
- Plans for Asset Life: Planning helps towns avoid surprise costs. Using yearly wear and tear, towns can decide when to repair or replace and save money by looking at the full cost over time.
- Keeps Taxes Stable: By planning ahead, towns can spread costs over time and avoid sudden tax increases.
- Finds More Funding: With a plan in place, towns can apply for grants to help pay for projects – less money needed from local taxes.
- Sets Priorities: Not every project can happen at once. Planning helps decide which projects matter most to the community.
- Avoids Costly Mistakes: Planning helps towns avoid last-minute decisions and budget problems. Without a plan, projects may cost more or miss long-term needs.
- Gives Residents a Voice: The capital planning process gives you a chance to weigh in. Should the town focus on plow trucks or wastewater upgrades? The plan opens that conversation.
- Improves Transparency: Residents can see what’s coming, give input, and prepare for things like road closures or construction noise.
- Builds Trust: A clear plan shows that the town is thinking ahead and using money responsibly.
How It Works
- Towns take stock of what they already own – buildings, roads, vehicles, equipment, utilities, land, and other assets – and its condition.
- They look 5 to 20 years ahead to decide what needs to be built or fixed.
- They figure out whether the project needs to be done in stages or all at once so major steps like design, permits, and construction can be included in the project cost.
- They figure out how to pay for each project or step. Should the town use cash from the town budget, previous savings, grants, special taxes, or borrowing?
- Plans can change if needs or costs change. Flexibility is built in because the legislative body (Selectboard, City Council, etc.) looks at the capital plan every year when they prepare a budget.
In May we will be hosting a regular convening of the region’s road foremen and the primary topic will be capital planning with Kathleen Ramsey from VLCT as the guest speaker. We’re working with the Brattleboro Development Credit Corporation, VLCT, and the Vermont Bond Bank to host a high-level introduction to capital planning and public finance in late summer/early autumn. We are also working to get WRC staff trained in capital planning support. A couple of weeks ago I traveled with two WRC colleagues to the excellent Capital Planning Forum hosted by the Vermont Bond Bank, which is also a great resource for towns in this work and to explore capital financing options for projects.