Question: What are the most important factors that can impact the development of priorities for operational budgets? What are the most important factors for capital budgets?

Overview: In budget planning, public administrators need to outline expenditures related to both operational and capital budgets. As you reviewed in this module’s resources, operational budgets are the day-to-day expenditures of a government, whereas capital budgets are long-term investments for an organization. Due to limited funding, public administrators need to determine priorities for both operational and capital budgets. In this short paper, you will explain, how priorities are determined, and at what stage in the budgeting process they are determined, for both types of expenditures.

Prompt: What are the most important factors that can impact the development of priorities for operational budgets? What are the most important factors for capital budgets? How are these factors applied in the budget cycle? How are capital budget elements included in operational budget decision making?

Specifically, the following critical elements must be addressed:
 Begin by identifying the most important factors that can impact the development of priorities for the following types of budgets. Be sure to use specific examples to illustrate:
o Capital budgets
o Operational budgets
 Then, explain how and when these factors would be applied in the budget cycle for each:
o Capital budgets
o Operational budgets
 Draw final conclusions about the relationship between capital budgets and operational budgets. Specifically, explain how capital budget elements are included in operational budget decision making.