State and Local Financial Instruments
Show Less

State and Local Financial Instruments

Policy Changes and Management

Craig L. Johnson, Martin J. Luby and Tima T. Moldogaziev

The ability of a nation to finance its basic infrastructure is essential to its economic well-being in the 21st century. This book covers the municipal securities market in the United States from the perspective of its primary capital financing role in a fiscal federalist system, where subnational governments are responsible for financing the nation’s essential physical infrastructure.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 13: ‘Non-traditional’ capital financing mechanisms

Craig L. Johnson, Martin J. Luby and Tima T. Moldogaziev


This chapter details some of the evolving capital finance mechanisms beyond traditional municipal securities that subnational governments have begun to utilize in recent years. Given the sizeable capital needs at the subnational level, governments have turned to other ‘innovative’ financing strategies such as federal loans and credit support, public–private partnerships and infrastructure banks. The federal government has encouraged the use of these financial measures and made it easier and more attractive for subnational governments to use them as a way to more efficiently access capital. This chapter discusses these strategies in depth and details some of the trade-offs associated with their use especially as it relates to issues of fiscal federalism. As described in previous chapters, state and local governments have historically funded their capital activities either on a pay-as-you-go basis or a pay-as-you-use basis. Pay-as-you-go refers to funding capital with government taxes and fees as such revenues are realized. Pay-as-you-use financing entails the use of debt finance in leveraging future fiscal resources for payment of capital costs in the current period. Historically, state and local governments employed debt finance via the selling of tax-exempt municipal bonds to raise capital on an up-front basis. These bonds were primarily repaid with the state or local government’s own-source revenues.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.