Public Finance Proposal: Final Project

Public Finance Proposal Part II: Sources of Funding

Rigina Cochran

MPA/553

June 10, 2019

Craig Hall

Public Finance Proposal Part II: Sources of Funding

The Woodmen road widening and interchange came as a result of the new development and significant growth, which was witnessed in Colorado Springs, and this project made the road transform into a major east-west arterial roadway. The road was expected to ensure that it served at least 100,000 vehicles per day, forcing the road to take another face of improvement. This project, therefore, brought in several ways, of revenue sourcing to ensure that the project becomes successful and complete. Serving as the primary purpose of providing an improved transportation system that will arise because of the new development that came up in Colorado (Caldwell, Roehrich & George, 2017).

Identifying Funding Sources for the Project

We have realized that most projects are likely to be financed from sources such as the equity government grants and debts. In the case of the Woodmen Road widening and interchange project, these three sources would be the best because they provide necessary implication by ensuring that cash flow for the project, they also claim for the income and the assets of the project and ensure that there is an ultimate liability for the project. Equity, in this case, is the money or the capital, which is invested in the project by the sponsors and on the other side, debts are the borrowing of the capital from the major financial institutions and also from the banks. Therefore, according to me, Woodmen Road widening, and interchange project would be in a position to get sources of finance from the sponsors who are ready to invest and from the financial institutions and banks to facilitate the project (Duca, Nicoletti & Martinez, 2016).

Public-Private Partners

Wooden Road widening and interchange project would also get sources of revenue from the public-private partnership which entails the collaboration that exists between the government agency and any private company sector to help in the process of financing the and operating the public projects. The public-private partnership helps to make the projects come to completion as quickly as possible because of the ready funds. A public-private partnership usually has a contract timeline of 25 to 30 years, and in most cases, funds are coming partly from the private sector, but the public sector pays back the private sector. The public partners ensure that the project is well defined and monitor compliance. The individual partners usually focus on the completion of the project, designing, implementation, and funding the project

Nonprofits. Nonprofits are the primary organization that is helping in serving the interest and the mutual benefits to the public. Most of the nonprofits are operating not to generate revenue to get income. Nonprofits include religious groups, educational; some are scientific groups and charitable groups. They are always ready to support people in their homes; they also support churches, labor unions, and many other projects. Wooden Road widening and interchange would be sponsored by the nonprofit organization to ensure that the plan of developing the transport network becomes successful at the end of the day. Most of the nonprofits do not expect interest, and therefore, they don't generate income for any project that they have supported (James, 2017).

Bond Issuance. Bond is considered to be the fixed income securities, and it is one of the assets that individual investors are used to. Mostly when entities are in need of finance to fund their projects or maintain their operations that are going on or even refinance some of the debts that exist, bonds may be directly be issued to the investors. The one borrowing the bond gives out the terms of the loan and the interest that is supposed to be paid within a given period. The benefit which is returned to the bond holder is to help in compensating the funds that were given out. This was one of the ways that the project of the Woodmen Road widening, and interchange would use to ensure that the project is completed (Soomro & Zhang, 2015).

Multilevel Government Financing. Multilevel government financing is grouped into two components, we have the vertical component of the governance, and this majorly involves the central government, the regional government and some of the local government which is including the provinces and the districts. We also have horizontal governance, which is involving the various ministries and the different departments of regional governance. Therefore, in this case, we have different levels of governance involved in the funding of the projects. For instance, various ministries will be busy, ensuring that their respective ministries are funding their projects. In the multilevel government financing, the different components work together to ensure that they pull for the finances for the existing projects in various ministries and departments (Woodman, 2016).

Effects of Taxation. Taxation has majorly helped to ensure that revenue which is required is raised to meet the expenditure. Taxes are also seen as instruments that provide control and regulation with the desire to influence the pattern of production, distribution, and consumption. Taxation helps in reducing the production and consumption of some of the harmful products, for instance, when high taxation is imposed on the alcohol and cigarettes their production will be low leading to minimal consumption of such substances because of their effects on health. Taxation also has an impact on the income distribution where we have realized that high-income tax usually reduces inequalities which may result in an unfavorable impact on the ability to work, invest and save (Caldwell, Roehrich & George, 2017).

Role that Financial Efficiency Plays in Obtaining Funding at State and Local Levels. The purpose of the financial efficiency in state and local government is to ensure that budgets are well designed. This will help both the state and the local government to achieve their term budget without any problem, mainly when the funds are utilized well. It will also help to develop the required projects, most of the projects both at the local government and the state government will be able to be achieved since there are enough funds which have been allocated for the projects like the road constructions, promotion of education and improved healthcare services. Financial efficiency at the local and the state government is vital because it also helps in enhancing the lifestyles of people (Duca, Nicoletti & Martinez, 2016).

Conclusion

In every project funding is a very vital aspect that makes the project come to its completion. It is very important that government projects should be done using the equity funds where the investors sponsor the project, either fully or halfway to ensure that the projected is completed. Debts are also another vital aspect that the government should consider is ensuring that projects are successfully done. There are also some financial institutions that are ready to fund various projects to ensure that projects are completed, and the money refunded within the agreed time with the agreed amount of interest. The government should ensure that they coordinate with the private sectors to ensure that the planned projects are achieved (Caldwell, Roehrich & George, 2017).

References

Caldwell, N. D., Roehrich, J. K., & George, G. (2017, February). Social Value Creation and Relational Coordination in Public‐Private Collaborations. Journal of Management Studies, 54(6), 906-928. Retrieved from https://onlinelibrary.wiley.com/doi/full/10.1111/joms.12268

Duca, M. L., Nicoletti, G., & Martinez, A. Vidal. (2016, March). Global Corporate Bond Issuance What Role for US Quantitative Easing? Working Paper Series, (60), 114-150. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1649.pdf

Jaimovich, N., & Rebelo, S. (2017, February). Nonlinear Effects of Taxation on Growth. Journal of Political Economy, 125(1), 265-291. Retrieved from https://www.journals.uchicago.edu/doi/full/10.1086/689607

James, E., (2017). James, E. (2003, May). Commercialism and the mission of nonprofits. Society, 40(4), 87-98. Retrieved from https://link.springer.com/article/10.1007%2Fs12115-003-1015-y

Soomro, M. A., & Zhang, Xueqing. (2013, December). Failure Links between Public and Private Sector Partners in Transportation Public Private Partnerships Failures. Journal of Traffic and Logistics Engineering, 1(2), 116-121. Retrieved from http://www.jtle.net/uploadfile/2013/0903/20130903023454274.pdf Woodman, D. G. (2016). Crowdsourcing Physical Network Topology Mapping with Net. Tagger. Retrieved from https://apps.dtic.mil/dtic/tr/fulltext/u2/1027723.pdf