Capital  Budget

GAO Glossary of Terms and Definition (September 2005)

Capital Budget

A budget that segregates capital investments from the operating budget’s expenditures. In such a budget, the capital investments that are excluded from the operating budget do not count toward calculating the operating budget’s surplus or deficit at the time the investment is made. States that use capital budgets usually include only part of their capital expenditures in that budget and normally finance the capital investment from borrowing and then charge amortization (interest and debt repayment) to the operating budget

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A budget that segregates capital spending from all other spending, what is usually considered the “operating budget.” In a capital budget, spending and receipts in the capital budget are excluded from the operating budget and are not included in the operating budget’s deficit or surplus calculations. A capital budget would include spending only for capital assets. Capital assets are usually defined to be limited to land, structures, equipment, and intellectual property that are owned and used by the Federal government and have a useful life of more than 2 years. However, some proponents of capital budgeting have suggested that capital should be defined to include Federal “investment” spending that yields long-term benefits. President Clinton established a Commission to Study Capital Budgeting by issuing Executive Order 13037 on March 3, 1997. The Commission is required to issue its report by December 17, 1998.

[The Congressional Budget Process: An Explanation, Appendix J (Glossary), Committee on the Budget of the U.S. Senate, S. Prt. 105-67 (Revised December 1998).]




Capital Lease