Building Institutions 



Through capital budgeting, all available funds are assembled and 

 allocated to the highest priority capital project needs. Each year, 

 projects can be recommended to the appropriate decision-making 

 body for funding on the basis of a systematic, substantiated plan. 

 Resource managers use capital budgeting to help set priorities for 

 capital facilities such as municipal treatment plants. 



Independent Mechanisms. Among other mechanisms, enterprise 

 and revolving loan funds should be considered. Enterprise funds 

 help manage the finances of government activities that are largely 

 supported through user fees. Common city enterprise funds in- 

 clude water and sewer services, electric and gas utilities, airports, 

 and local transit. An advantage to running a program through an 

 enterprise fund is that revenues can be predicted with reasonable 

 certainty. 



Revolving loan funds (RLF) provide long-term, low-interest loans 

 for major capital investments. Individual RLFs are capitalized and 

 operated in various ways with which managers must become 

 familiar. The benefits from revolving loan funds include the ability 

 to target investments to specific project types and the security of a 

 long-term source of capital with few effects from political volatility. 

 However, because the fund must have capital to begin lending, the 

 state must first authorize or otherwise secure seed capital. 



The 82,000 individual governments in the United States provide the 

 framework within which capital for investment is secured and 

 managed. The characteristics of these governments and their 

 components are often the critical variables in the creation and 

 implementation of a financing plan. Governments include federal, 

 state, and local authorities (regional authorities and special dis- 

 tricts). 



Conventional governments, including federal agencies, state 

 government, and governing boards of local governments, operate 

 a wide variety of services, and they have the ability to authorize an 

 equally wide variety of mechanisms to recover those services. 

 However, conventional governments rely on only a few sources to 

 recover costs. The federal government is the primary public inves- 

 tor in natural resource protection programs. EPA's National Estuary 

 Program, for example, funds programs to preserve the water and 

 resources of estuaries threatened by overuse and development. A 

 number of other federal programs assist in the restoration and 

 protection of estuarine and marine waters such as U.S. Soil Con- 

 servation Service, Farmers Home Administration, and Coastal 

 Zone fVlanagement Act. State and local governments also play an 

 important role in the financing of environmental protection 

 programs. 



In certain situations, the natural resources that need to be protected 

 are not covered by existing institutional boundaries. Interstate 

 and/or inter-jurisdictional coordination is frequently necessary. 

 Often, many of the revenue-raising mechanisms that link users to 

 payments are readily administered by special-purpose units 

 created to manage such flows. Hence, managers looking for ways 

 to raise revenue for implementing estuary protection programs 

 should consider creating a special-purpose government. These 

 governments include, for example, stormwater management dis- 



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