The Financial Primer 



Accessing Revenues 



In order to compete successfully for limited funds, estuary program 

 managers must understand the basic principles of public finance. 

 To finance technical plans, managers must access revenues, 

 manage the flow of funds, and build institutions to oversee financial 

 planning and management. The financial primer discusses ways to 

 link sources and uses of funds, and institutions that control these 

 programs. 



Several kinds of financial mechanisms, or tools, help establish a 

 flow of funds from sources to their uses. The financial primer 

 reviews the basic characteristics of five tools used to access capital 

 including these: 



• Levying taxes 



• Collecting fees 



• Securing intergovernmental transfers 



• Issuing municipal bonds 



• Attracting (extracting) private capital 



The usefulness of each depends on the investment, project costs 

 and benefits, and explicit acknowledgement of any financial risk. 



Taxes. Cities and states have successfully used taxes to fund 

 projects to protect the coastal environments. Income taxes, 

 property and sales taxes, and commodity taxes — gas, cigarettes, 

 and liquor — can be used to raise revenues. In Washington State, 

 for example, an eight-cent-per-pack cigarette tax helps finance the 

 state's water quality protection plan. 



Fees. Fees, such as charges to polluters for the costs their dischar- 

 ges impose upon society, can be used to help finance pollution 

 control activities. Fees can be calculated as a function of use — user 

 fees — or on the basis of proportional cost imposed on the system — 

 impact fees. For example, in many coastal areas septic systems 

 are a source of near-coastal water pollution. Septic sources can be 

 controlled by inspecting tanks periodically, pumping out septage, 

 and replacing poorly operating drain fields. A number of com- 

 munities have financed such programs entirely with periodic fees 

 collected from homeowners with septic systems. Impact fees can 

 be charged to recover the cost of services from those responsible 

 for creating the need for those costs. In California, for example, 

 several wastewater treatment plants have been financed with fees 

 paid by land developers on the basis of demands for treatment that 

 their developments are expected to generate. 



Intergovernmental Transfers. Fees or taxes may be collected by 

 one level of government and passed on to another. These inter- 

 governmental transfers, as they are known, redistribute income 

 geographically, usually from federal to state to local governments. 

 Even though intergovernmental transfers are used for a consider- 

 able proportion of state and local revenues, their utility for support- 

 ing broad governmental activities is often limited. 



Debt financing. Resource managers can use debt financing to 

 raise "up-front" capital for a facility and then distribute the burden 

 of repayment among those benefitting from it. Governments borrow 

 funds from investors by issuing debt in the form of a bond. However, 



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