Reasons for a Capital Improvements Plan (CIP)

One of the primary reasons for a CIP is that the stakes are high because the projects are usually very large and very expensive. A second reason is that decisions made will impact the county financially for years. A third reason is that spending will vary from year to year because needs vary from year to year. A fourth reason is that the asset service life is long and should meet the citizens’ needs for the life expectancy of the asset. A secondary reason for a CIP is that the implementation of the projects will take time because of potential financing and purchasing or construction time.

In summary, reasons for a CIP include:

1. Projects are large and expensive
2. Debt financing is often used and extends for years
3. Spending varies from year to year
4. Decisions have impact for years
5. Implementation takes time and happens in stages

As of 2008, 91 of the 95 counties in Tennessee were in debt. This indebtedness is the result of capital improvements made within those counties. As of 2008, at least sixteen counties have a specific revenue source that annually funds a capital improvement fund(s). This is an increase of seven additional counties since 2006. Both of these statistics confirm that capital projects will continue to be a part of the annual operations of counties and should be considered in the overall planning process of a county’s finances.

It is highly recommended that a county develop a Capital Improvement Plan.