What do capital budgets primarily cover?

Capital budgets primarily cover the construction and maintenance of long-lived assets. This is because capital budgeting focuses on expenditures that are intended to create, enhance, or maintain physical assets that have a useful life extending beyond one year. Examples of such long-lived assets include parks, roads, bridges, and utility infrastructures that cities may develop or improve.

In municipal contexts, capital budgets are essential for planning significant projects that require substantial investment and have long-term benefits. The allocation of funds in a capital budget is typically aimed at projects that improve public facilities and infrastructure, ensuring they meet the community's needs for years to come. This contrasts with operational budgets, which are concerned primarily with the day-to-day expenses necessary for the ongoing functioning of municipal services.