a bond must be repaid, so revenue must be raised through taxes 

 or user fees. While bonds cannot finance routine expenses such 

 as water quality monitoring, they are well suited to finance facilities 

 such as wastewater treatment plants. Bonds may be short-term, 

 long-term, general obligation, or revenue bonds, depending upon 

 how the principal and interest are repaid. When considering bonds 

 to finance projects, planners must evaluate credit ratings and interest. 



Private Capital. Tapping the resources of private capital is another 

 way of financing projects to protect estuaries. Public/private 

 partnerships are another way to finance estuary protection initia- 

 tives. For example, the public partner might finance and build the 

 facility while, for a fee, the private partner operates and maintains 

 it. In 1 986, about 1 00 municipal wastewater treatment plants were 

 operated privately. Some of the most innovative ways in which 

 estuarine managers can attract private capital is to form new types 

 of public/private partnerships by taking advantage of rapidly es- 

 calating real estate values. For example, impact fees have been 

 used to finance capital facilities like sewage treatment plants in 

 rapidly growing areas. Similarly, selling "capacity credits" to 

 developers is a new way to finance pollution control projects. 

 However, through the use of capacity credits, users pay voluntarily. 

 Capacity credits are best suited to finance facilities such as treat- 

 ment plants or stormwater control facilities. 



Once funds have been secured, it is important that they be dis- 

 bursed and managed successfully. Some activities require an initial 

 lump sum while others require an annual budget to support ongoing 

 activities. Taxes, fees, and other forms of revenue must be directed 

 to the appropriate programs. Hence, it is extremely important that 

 program managers understand the legislative budgetary and ap- 

 propriating process. The financial primer explains three techniques 

 for coordinating the distribution of money: appropriations, capital 

 budgeting, and independent mechanisms. 



Appropriations. Based on previously authorized budgets, a legis- 

 lature appropriates funds to government programs annually. For 

 some programs, the Congress, states, and local governments 

 appropriate funds on a project-by-project basis. The most obvious 

 drawback to this type of funding is that year-to-year appropriations 

 for multi-year projects are not assured. 



Capital Budgeting. Most state and local governments have some 

 form of a capital budget that accounts for construction and upkeep 

 of the physical facilities owned by public entities. Almost all capital 

 budgets have four basic components: 



• Selecting the scope of services for which the state or local 

 government is responsible; 



• Identifying assets through a physical inventory, an assess- 

 ment of condition, and an evaluation of performance; 



• Integrating the data with estimates of costs to operate and 

 maintain existing facilities and build new ones; 



• Drafting a summary plan for distribution to (and concurrence 

 by) all governmental public works agencies and interested 

 nongovernmental groups. 



Managing Revenues 



E3 



