A National Association of Counties (NACo) County News article (2016-05-28) explored the important role the federal government can play in funding major local infrastructure projects by highlighting federal assistance for the Purple Line. From the article:
The Purple Line light rail project between Maryland’s Montgomery and Prince George’s counties couldn’t happen without the federal government’s investment, Montgomery County Councilmember Hans Riemer said at a Capitol Hill briefing for Infrastructure Week, held by a coalition of local government and interest groups including NACo on May 19.
“There was a strong push in Montgomery County to abandon the federally funded Purple Line and substitute for it a locally funded bus rapid transit system,” he said. “The rationale was that the federal government wasn’t going to be there.”
But the county made its case to the Federal Transit Administration in 2014 anyhow — from a position of faith, as Riemer put it — and came away with nearly $900 million in federal funding.
The federal funding convinced Maryland Gov. Larry Hogan (R) to change his mind on supporting the project, to the tune of $168 million, to go with $217 million from Montgomery County and $120 million from Prince George’s, plus in-kind contributions worth $10 million from Prince George’s.
The article noted that Reimer and Chesterfield County, Va., Deputy County Administrator Sheryl Bailey also stressed the importance of keeping municipal bonds tax exempt:
Bailey and Riemer defended the tax-exempt status of municipal bonds, the main tool counties use to fund infrastructure improvements, but also perpetual low-hanging fruit for federal spending cut plans. An International City/County Management Association study found that 90 percent of state and local capital spending is financed by debt, mainly through municipal bonds.
If you make financing more expensive, you will get less infrastructure,” Riemer said, acknowledging the pressure Congress receives to get rid of tax expenditures but promising it was worth it.
“Our productive capacity as a country and as an economy is dependent on this infrastructure, and the state and local government infrastructure investments are pivotal,” Bailey said. “There are other funding mechanisms, such as pay as-you-go and public-private partnerships,” she said. “They are effective for certain types of projects, but they’re not a robust alternative for the vast majority of capital projects.”