The Capital budget is primarily funded through the issuance of state general obligation bonds. Items funded in capital budgets often include land acquisition, repair, renovation and construction of state facilities; acquisition, construction and repair of state parks, trails, interpretive centers, campground facilities, forests, wildlife management areas, dams and flood control structures.

Capital budgets also include grants to local government for repair and construction of schools, parks, bridges and wastewater treatment facilities. Historically, major capital budget bills have been passed in even-numbered years.

The state constitution limits the term of these bonds to twenty years and significantly restricts how these funds may be spent. Principal and interest costs of the bonds are included in the state's general fund operating budget.

Minnesota Management & Budget issues instructions for capital budget requests in April of the year preceding its submission to the Legislature. Preliminary submissions of state agency capital budget requests are due to Minnesota Management & Budget in June of that year, with final submissions due in September. The Governor's capital budget proposals to the Legislature are then released in January of the year in which the Legislature is expected to act on the recommendations during the legislative session. A major bonding bill was adopted in 2008. The next major bonding bill is expected to be adopted in 2010.