In municipal budgeting, what typically happens to funds that remain unexpended in a capital project?

In the context of municipal budgeting, unexpended funds from a capital project are typically cancelled to capital surplus. This means that if there are any funds left over after a capital project is completed, those funds do not remain in the budget for the current year or get added to any other projects. Instead, they are reallocated and contributed to a surplus fund that can be utilized in the future for other capital needs or projects.

This process helps municipalities manage their budgets effectively by ensuring that leftover funds are not lost but are instead put towards future investments in infrastructure or services. By cancelling these funds to capital surplus, municipalities can ensure better planning and allocation for future budgets, taking a proactive approach to fiscal management.

The other options, while they may seem plausible, do not accurately reflect the established practice in municipal finance regarding unexpended capital project funds.