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Does Stafford Need a Capital Improvement Fund?

Occasionally, Stafford’s First Selectman Bill Morrison suggests that he would like to create a Capital Improvement Fund for Stafford. With the budgeting process for next year’s referendum already underway, we thought it was worth taking a look at Capital Improvement Funds, what they are used for, and why Stafford might need one.


First and foremost, it’s important to say that when you start researching Capital Improvement Funds, it’s almost impossible to separate them from Capital Improvement Plans (CIP). In fact, they are used interchangeably at times. The CIP acronym is often used in place of a Capital Improvement Fund, but these two things go hand in hand.


Towns and cities typically have a capital plan to guide decisions about when and how to address the community’s needs. Part of that includes setting aside funds into a savings account to address those needs proactively rather than reactively. So, let’s get into it. 


What is a Capital Improvement Fund?

Many, if not most, municipalities have a Capital Improvement Fund. Typically, these funds are set aside to help towns achieve their capital improvement projects without raising funds for individual projects via the yearly budget. As the University of Tennessee puts it, “A CIP can provide for stable payments and tax rates over a period of time.”


Building up these funds usually requires a budget line item, but by adding smaller amounts to the fund yearly, municipalities can build their savings and draw on them when the time comes to address qualifying maintenance or improvement projects. Like a personal savings account, these funds make it possible to address large costs – whether expected or not – without raising additional funds through taxes or dipping into the General Fund. Often, when a town does not have these savings in place, projects go unaddressed or require a bond, and towns must pay the interest that goes along with borrowing money.


During last year’s budget discussions, a new roof for a town garage was initially included. After cuts were made, however, that project was put off. If the town had a robust fund for capital improvements, it could have drawn on that reserve to complete that project. It could also use CIP funds for paving projects.


What qualifies as a capital improvement?



“A capital improvement project—also called a capital project—is typically a permanent structural change to a property or asset to prolong its life, increase its value, or enhance its capabilities. 


For local governments, capital projects can include asset upgrades or large scale maintenance work. Some examples of capital projects include building a new library, replacing lead water service lines with pex or another safe material, or repaving streets.”


Importantly, OpenGov also says, “Capital improvement planning is primarily used by local government officials to create a long-term plan for capital improvement projects. It is critically important and one of the major responsibilities for a government entity.” 


Additionally, “The capital plan puts the community in position to quickly take advantage of federal or state grant programs and opportunities.” 


Should Stafford establish & fund a Capital Improvement Fund?

  • Yes

  • No


Do residents want a Capital Improvement Fund?

As noted earlier, developing a fund to address capital improvements would require adding to the account little by little. A line item would likely be added to the yearly budget, and that money would be set aside for future projects. So, while this ultimately helps stabilize taxes while addressing projects that need to be done, it requires voters to commit to funding it every year. When budgets get cut, this line item is likely to take a hit in order to keep more immediate programs going. 


So, the question remains: Do Stafford residents see enough value in planning ahead to make the sacrifice in advance?

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