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August 7, 2012 > CIP, helping to make sense of municipal budgets

CIP, helping to make sense of municipal budgets

Nowhere do more acronyms exist than in the government circles. Within a group of specialists, this shorthand is a timesaving device to communicate quickly and with some precision. However, for those outside the initiated, this terminology can lead to misunderstandings or no comprehension at all. At budget time, the term "CIP" is often used to indicate a specific part of government budgetary planning. What is it and why does it matter? TCV asked Soren Fajeau, P.E., Senior Civil Engineer at the City of Newark to explain.

TCV: What is CIP and what function does it have in the City Budget?

Fajeau: CIP is an acronym for Capital Improvement Plan, a detailed policy statement of plans to fund capital improvement projects over a two-year budget cycle. This can include roads, buildings, parks and any part of the City's infrastructure. It can also include major equipment purchases that are not included in a specific equipment replacement program.

TCV: What is included in Newark's CIP at this time?

Fajeau: Our focus at this time is on the infrastructure and existing assets. We are currently in a maintenance mode rather than expansion, preserving what we have.

TCV: Has revenue from the Utility Users Tax been added to the CIP?

Fajeau: In 2011, $100,000 was added to the Capital Improvement Fund. That has been the only addition since 2004. There is no plan at this time to use any other UUT funds for CIP purposes.

TCV: Which department handles the CIP?

Fajeau: The Engineering Division of Public Works takes the lead. A 'Call for Projects' in October 2011 asked all City departments to submit requests for the next two-year budget cycle. Engineering staff then evaluated these proposals on the basis of critical issues, funding sources and impacts. Due to current fiscal restraints, expenditures are also scrutinized to see if they satisfy a regulatory requirement, a liability issue or preserve existing assets. A project list is created for review by senior management staff and City Council.

TCV: Are there any other sources of funds for Capital Improvement Fund?

Fajeau: Traditionally, funding for the Capital Improvement Fund, which is the most flexible, has been generated from any City operating surplus. When economic conditions were better than today, we were able to add funds on a fairly regular basis. This was a source of funds for facilities such as the Silliman Activity Center and Fire Station #1 on Thornton Avenue. Since the economy has restricted this funding source, we have taken a very conservative approach.

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