The Principles Of Sound Financial Budgeting For Prince William County

Capital budgeting is a process that includes the planning for the future financial obligations of any organization. A capital budget specifically outlines the manner in which expenditures and investments will be pursued. Debt capacity refers to the limit beyond which the debts of an organization should not exceed. Even though the debt capacity is focused on the determination of limits, it is also a measure of an organization’s ability to borrow funds. State and local capital investments are a major share of total budget decisions in any given year. They usually rely on different forms of borrowing to finance capital investments. (Lee, et.al., 2008).

Prince William County uses The Principles of Sound Financial Management to set very policies

This storm was the second of four nor'easters that occurred during the 2009-2010 winter. This storm brought heavy snow to the Northeast's population. The snow removal budget for Prince William County was greatly exceeded because this huge storm was not factored into the debt capacity. The County must either increase its revenues or it must reduce its capital improvement plan, either of which will create additional debt capacity. If this doesn’t happen, the only other alternative upon reaching capacity is to suspend debt issuances and employ cash-to-capital until further capacity becomes available. It is important to note that this alternative would significantly slow down the construction of needed

To finance the county expenditures, it agrees to pay investors or lenders a financial return at a future time. (Lee, et. al., 2008). Debt reorganization is often an opinion or decision between the groups affected by the changing of terms of services and debts that exist. In most cases they favor the debtor. There are a variety of ways in which reorganization can be carried out. They include the following: debt assumption which guarantee a new structured organization to takes over the outstanding debt and become answerable for the debt. A state can decide to take over the debts of a struggling city that cannot meet its financial needs. Debt restructuring is another way where the city can request for the change of some terms and condition that could favor them in an effort to settle their debts