Instructions for Local Units of Government with Capital Budget Requests
Capital budget requests are submitted through the web-based Capital Budget System (CBS). CBS uses the LoginMN sign-on service and local government staff accessing CBS must use the link below to log in (see below). Visit the CBS website for user guides and training videos.
Minnesota Management and Budget (MMB) issues instructions for capital budget requests in the spring of odd-numbered calendar years on this webpage. The capital budget process follows a timeline set in statute for state agencies and political subdivisions, including local units of government, and begins in odd-numbered calendar years with the collection of requests for the upcoming even-numbered year legislative session.
Local governments are encouraged to submit capital budget requests in the early summer of odd-numbered years. MMB publishes and submits this information to the Legislature by July 15 of each odd-numbered year.
Local governments may edit or submit new capital budget requests in the fall of odd-numbered years. MMB publishes and submits this information to the Legislature with the Governor’s capital budget recommendations by January 15 of the following even-numbered year, alternating years with the biennial operating budget, which is presented to the Legislature in odd-numbered years.
New Login Process for Local Governments
The Capital Budget System (CBS) uses LoginMN for account management and security. All local government staff accessing CBS must create a new LoginMN account in order to use CBS to submit a Capital Budget request starting May 2025.
Staff should register using their work email address so the MMB Budget Operations team can authorize their access. Registered users can access CBS from the Local Gov Login Portal. Read the How Local Governments Access CBS guide for specific instructions.
For questions about the capital budget instructions and process, please contact Amanda Burckhardt, Capital Budget Outreach & Analysis Specialist, amanda.burckhardt@state.mn.us.
Additional Information
Due Dates for 2026 Project Information in CBS
June 13, 2025 - Local Units of Government Final Requests
October 17, 2025 - Local Units of Government Final Edits
Policies, instructions, and procedures for implementing approved capital projects and grant agreements are issued jointly by the Debt Management Division, the Budget Division, and the Accounting Division - to ensure the requirements of all applicable statutes and general obligation (G.O.) bonding requirements are met. State agencies and local grantees can find applicable instructions here:
All requests must be entered into the Capital Budget System (CBS) with adequate information to allow for meaningful consideration of the project by the Governor and Legislature. CBS is a web-based application, and all users must be authorized by MMB. CBS opens for project submissions in early May of odd-numbered years. MMB publishes local governments' requests and the Governor’s capital budget recommendations using data entered in CBS.
All of the information we need to publish the capital budget documents is collected in various fields in CBS. You will need to submit the following information:
Requests by amount, in priority order (if more than one request)
Brief summary of each project request
Detailed description of the project
Rationale for why the project is needed
Timeline for project
Other relevant background information
All funding sources (past and requested)
Detailed listing of costs
Answers to applicable statutory requirements
Resolution of support from the governing body
The information you provide will be compiled, published on MMB's website, and provided to the Governor and Legislature for consideration, and is used to publish the Governor’s recommended capital budget.
The Capital Budget Instructions document provides a comprehensive list of agencies involved in the capital budget process. Please refer to this document for the full listing. Below are examples of agencies you may collaborate with.
If you are submitting a capital budget request, you will work with Minnesota Management and Budget, which:
Reviews proposals for completeness and bondability
Collects and disseminates information and provides instructions and form
Calculates the cost of proposed bonding packages
Forecasts debt service costs of future bonding bills based on a ten-year average of bond authorizations
Assists with implementation issues after enactment
If you are submitting a capital budget request that impacts a state building, seeks funding for asset preservation, or seeks funding for predesign, you will work with the Department of Administration, which:
Coordinates facility condition assessments (useful in asset preservation)
Oversees capital improvements to state-owned buildings
Facilitates compliance with sustainable building guidelines for state-owned buildings
Reviews predesign before design begins
If you are submitting a project with significant energy efficiency potential, which may be eligible for the Guaranteed Energy Savings Program, you will work with the Department of Administration and the Department of Commerce:
Capital projects are expected to employ sustainable building guidelines and high-performance building practices (M.S. 16B.325). Projects should be:
Energy, cost, and resource efficient
Healthy, durable, and adaptable
Agencies should identify and quantify energy savings opportunities in asset preservation lists
Executive Order 11-12 seeks to advance statewide goals of reduced building energy use, and to capture economic and environmental benefits of energy conservation work in state buildings through:
Guaranteed Energy Savings Program (M.S. 16C.144)
State Energy Improvement Financing Program (M.S. 16B.322)
If you are submitting a request for construction, remodeling/renovation, or relocation, you will work with MN.IT:
Consolidated agencies consult with MNIT CBTOs, MNIT teams, and enterprise services staff to ensure that appropriate technology and information security capabilities are in place to support in-office work, full-time telework, and hybrid telework.
Non-consolidated agencies who consume MNIT services are encouraged to consult with MNIT enterprise services staff ahead of any significant change to office locations and their mix of in-office and remote work, to ensure that appropriate technology and information security capabilities are in place to support such changes.
The Minnesota Constitution defines how GO bond proceeds can be used. Article XI, Section 5, of the Minnesota Constitution contains the authority for incurring public debt (G.O. bonds). Subdivision (a) authorizes debt “to acquire and to better public lands and buildings and other public improvements of a capital nature, and to provide money to be appropriated or loaned to any agency or political subdivision of the state for such purposes.”
In other words…
The project must be for a public purpose
The project must be publicly owned
The purpose of the bonds must be clearly set forth in the law
Project activities must constitute capital expenditures
What do these standards mean?
Public Purpose –
Must achieve public goal or benefit
Dominant benefit may not be to private entity
Public entity is responsible for implementation of the public purpose
Publicly Owned –
A public entity must own the property
No grants may be made to private entities, including nonprofits or tribal governments
If not publicly owned outright, “ownership” must be in fee or a lease or easement for at least 125% of the property’s useful life
Clearly Defined In Law –
If the project is enacted in a capital investment bill:
The law must identify specific project or refer to a statute establishing a specific governmental program (which may fund multiple projects)
The appropriation must specify all desired project activities
If certain activities are not specified in the appropriation, funds may not be spent on them even if they are capital expenditures
Capital Expenditures –
See the following question for more information on this standard.
The basic test for capital expenditures requires that the project be long lived (10 years or more) and that expenditures be for a fixed asset (land, building, capital equipment or other improvement to land).
The constitution requires GO bond proceeds to be spent on activities such as “acquisition”, “betterment”, and “improvements”.
Activities that are eligible for GO bond proceeds
Examples of eligible activities include:
Purchase of land, buildings, easements
Predesign and design
Construction (including environmental testing and site preparation)
Major renovation, roof reconstruction and replacement, major window replacement (if add to value or life of building)
Fixtures, furnishings and equipment, only if installed:
Upon initial construction, or
During major renovation to make the facility usable for the first time by the state agency or grant recipient
Art – up to 1% of appropriation for building construction or alteration (M.S. §16B.35)
Activities that are ineligible for GO bond proceeds
While this list is not exhaustive, the following examples are ineligible for GO bond proceeds:
Options to purchase land or buildings
Fixtures, furnishings and equipment that don’t fit into categories above
General studies to evaluate the need for a capital project
Educational, promotional or informational costs incurred for a project not yet sited
Computer and financial modeling for a project not yet sited
Master planning
All relocation and moving costs
Operating and maintenance costs
Betterments to leaseholds with less than a 10-year term
The State Agency and Local Government Requirements document provides a comprehensive list of requirements that apply to local projects. Please refer to this document for more information. Below are examples of additional requirements.
Grant agreements are required when a state agency funds a grant to another public entity. MMB has prepared generic forms for state agencies to use.
Forms are slightly different depending on the funding source:
GO bond funds disbursed under an agency program
Other GO bond-funded projects
General fund (cash)
The grantee must have independent statutory authority to operate the project (for example, via charter or statute). M.S. §16A.695 and Commissioner’s Order do not create new authorizations, and bonding legislation alone does not normally provide authority to operate the project or program.
Grant recipients must demonstrate to the granting agency that they have an ability and plan to fund the program intended for the facility.
If operated by a public entity:
Entity must submit to granting agency a budget item or resolution supporting operation
If operated by a private party:
Granting agency must approve initial program implementation plan
Annually, granting agency must review program evaluation report and budget
All financing must be in place to complete the project before the grant will be made available (M.S. §16A.502). The grant must clarify what the “project” is; e.g., if just predesign, funding for construction is not needed.
MMB’s Capital Grants Manual lists acceptable documentation for different funding sources.
There are restrictions on the use of GO bond financed property. “Private use” is any direct or indirect use by a nongovernmental person or entity. Bond-financed facilities used for private business threatens the tax-exempt status of the state’s bonds. If you anticipate private use in your proposed facility project, please involve MMB at the earliest opportunity by contacting budget.finance.mmb@state.mn.us to discuss options for avoiding private use pitfalls. Certain IRS safe harbors may apply, so please involve MMB at the earliest opportunity. The following are some examples of private use:
Cell phone towers, solar panels, electric charging stations
In these cases, a use agreement may be necessary. A use agreement is a lease, management or other contract between the public owner of bond financed property and another party operating or using it.
A political subdivision cannot be a mere fiscal agent or conduit through which general obligation (GO) bond funds flow. While outside organizations may work with a political subdivision to request GO bond funds for a project that has a public purpose, the political subdivision must have a qualifying ownership interest in the project and must remain responsible for operating the bond financed property and the public program associated with it, even if the outside group abandons the project or property. A political subdivision can have a qualifying ownership interest through fee title or through a ground lease or easement interest that meets the requirements of the GO Checklist for Ground Leases and Easements found here: https://mn.gov/mmb/debt-management/capital-projects/grant-agreements/checklists.jsp. When an outside group wants to be involved with the operation of a bond financed project, the political subdivision that owns the project can enter into a use agreement with the outside group permitting the outside group to carry out the governmental program. Such a use agreement must meet the requirements of the GO Checklist for Use Agreements found here: https://mn.gov/mmb/debt-management/capital-projects/grant-agreements/checklists.jsp.
Nonprofit organizations that have a capital budget request, but the project will not be owned by a political subdivision, can share project information with MMB and the Legislature to request funding from a funding source that does not involve GO bonds. Such requests are most often for general fund cash. Please review the Instructions for Nonprofits and Tribal Governments with Cash Capital Budget Requests webpage for more information about requests for projects that will not be owned by a political subdivision. It is important that the entity requesting funds for the project, and receiving the state funds in the bonding bill, has the ownership interest in the project.”
Local projects in the bonding bill are commonly required to provide non-state matching funds as a condition of receiving the state capital appropriation, pursuant to M.S. §16A.86, subd.4. Sometimes, the bill language for enacted capital appropriations specifies that the recipient may not receive the capital appropriation until the recipient has a commitment for or receipt of matching funds. Non-state funding may include federal, local, and private funds.
Capital projects must also meet the “full funding requirement” in M.S. §16A.502. In many cases, additional financing is needed to complete a project above and beyond the amount of the state appropriation plus matching requirements named in the appropriation bill. In these cases, the grantee must similarly demonstrate that all financing is in place to complete the project. Applicants should become familiar with M.S. §16A.502, which states, in part, “If a state appropriation or grant for a capital project or project phase is not sufficient, by itself, to complete the project or project phase, and thus requires a commitment from other sources: (1) the commitment, including any required match, must be in an amount that, when added to the appropriation or grant, is sufficient to complete the project or project phase; and (2) the appropriation or grant is not available until the commissioner [of MMB] has determined that the commitment is sufficient.”
The grant recipient must provide sufficient documentation to the granting agency to verify that it has complied with all matching requirements. For further information, please refer to the financial operating policy 0302-01. Specific questions on matching requirements should be forwarded to the Capital Bonding Coordinator at MMB.
Local governments that receive a grant or a loan made from state general obligation bond proceeds often want to be reimbursed from the bond proceeds for expenses that were incurred in the past and for which they have already paid their contractor from other funds. However, Minnesota’s general obligation bonds are tax-exempt. Federal tax law regulates the issuance and the use of tax-exempt bonds by states and local governments. The tax regulations limit the state’s ability to use the proceeds of tax-exempt bonds to reimburse costs that have already been paid from other funds.
Any expenses incurred by a political subdivision for a project prior to the effective date of the bonding bill must remain funded by sources other than general obligation bond proceeds, such as local funds. Non-state expenditures such as these can count toward matching funds and/or full funding for the project. Until state funds are appropriated and a grant agreement is entered into, the grantee begins work at its own risk and is responsible for understanding and complying with all applicable public contracting rules.
Grantees should plan to have a grant agreement executed within 4 years of the appropriation. The commissioner of MMB issues a cancellation report on January 1 of each year.
The cancellation report lists all bond and general fund capital appropriations enacted at least 4 years previously with unspent and unencumbered balances
The 1/1/2027 report will show amounts from 2022 bonding bill and earlier
Such balances are cancelled as of July 1 of the year of the report
M.S. 16B.323: Solar Energy in State Buildings. Up to 5% of appropriation to be used on solar energy system- any new building that receiving bond funds, includes additions and major interior configuration or energy system.
M.S. 16B.326: Heating and Cooling Systems. Written plan w/liredesign to consider providing Geothermal & Solar Energy Heating & Cooling Systems on new or replacement HVAC systems
M.S. 16B.335, subd. 1: Notification to Legislature. Notification to select House & Senate members prior to final plans. Legislative response is needed prior to preparing final construction documents.
M.S. 16B.335, subd. 3: Predesign submittal. Predesign packages must be submitted to the Dept. of Administration for approval. Statute exempts certain projects from this requirement.
M.S. 177.42-44: Prevailing Wage. Contractor must pay prevailing wages and hours of labor.
M.S. 16A.695: State Bond Financed Property Requirements. Various requirements related to leases and management contracts, sale of property, program funding, ground leases, and grant agreements.
M.S. 16C.285: Responsible Contractor. Minimum requirements for contractors in order to receive contracts for projects.
M.S. 16A.502: Non-state Commitments. If an appropriation is less than the total project cost, a sufficient contribution/match from non-state sources is required.
M.S. 16A.86: State Share of Local Projects. State appropriation cannot exceed half the total project cost. Certain types of jurisdictions and projects are exempt.
M.S. 363A.36: Certificates of Compliance for Public Contracts. Affirmative action plan certificate of compliance required for state agency contracts exceeding $100,000 and political subdivision contracts exceeding $250,000 that use state GO bonds.
M.S. 363A.44: Equal Pay Certificate. Equal pay certificate of compliance required for state agency contracts exceeding $500,000 and political subdivision contracts exceeding $1,000,000 that use state GO bonds.
Capital investment bills: Requirement to use U.S.-made steel (only if included in enacted legislation)
