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 on the limits of how much debt the County is permitted to incur The level of annual debt service should not exceed 10 of total revenue or 3 of land book assessments During unforeseen circumstances the need for roads parks public safety and school facilities will quickly consume the remainder of our debt capacity This can happen when unusual and unexpected circumstances like Snowmageddon of 2010 a paralyzing and crippling blizzard that had major and widespread impact in the Northeastern United States
