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Grants to, ..~itical Subdivisions Strategic Planning =ummary <br /> <br /> AGENCY CAPITA,_ 6UDGET REQUEST <br /> Fiscal Years 1998-2003 <br />Dollars in Thousands ($137,500 = $138 thousand) <br /> <br />AGENCY MISSION STATEMENT: <br /> <br />The Department of Finance has received local project requests from a variety of <br />political subdivisions and associated local organizations throughout the state, as <br />provided in the following pages. These requests have been collectively grouped into <br />this section of the capital budget, "Grants to Political Subdivisions." These are local <br />requests which cannot be processed through existing state wide grant programs as <br />currently offered or proposed by state agencies. <br /> <br />DEPARTMENT OF FINANCE ANALYSIS: <br /> <br />In the following request forms, Depadment of Finance comments are provided for a <br />number of local projects that address the issue of local match funding. Recognizing <br />the interest of state decision-makers to occasionally form funding partnerships and <br />provide state financing for various local projects, many of which involve significant <br />state funding, the department wishes to outline a series of recommendations <br />regarding state funding for these local projects. <br /> <br />Recognizing that local project requests are quickly becoming more prevalent in the <br />state capital budget process, a number of public policy issues arise. First, the <br />department is concerned that state funding for local projects has the effect of <br />displacing resources otherwise intended for state agencies. Second, the department <br />is concerned that state funding for local projects has produced a situation in which <br />local governments now have a strong incentive to avoid prioritizing and financing <br />requests at the local level and avoid reordering local budgets accordingly. Third, the <br />process of providing state funds to local governments for predesign activities which <br />in turn produce additional requests for state construction funds seems to be a <br />curious incentive for the state to offer, given that requests typically outpace funding <br />capacity by as much as a three-to-one ratio. <br /> <br />In recent bonding bills, many local projects have received state funding based on <br />various non-state matching requirements. These ratios have been inconsistent. <br />Other projects have received appropriations with no local matching requirements at <br />all. While the application of match requirements has been uneven, the rationale is <br />clear -- match requirements recognize the local benefit of such projects, allow limited <br />state funds to extend further to the extent supplemented by local funds, require local <br />governments to have a greater stake in the success of the project, and enable local <br />projects to be funded at a higher level due to infusion of state resources. <br /> <br />Building on these concepts, the Department of Finance offers the following <br />recommendations for state funding of local capital projects: <br /> <br />· Political subdivisions should fund local projects to the fullest extent possible before <br /> <br />requesting state assistance for capital costs. <br /> <br />· Whenever possible, particularly for larger funding requests, local units of <br />government should be asked to prepare and finance predesign documents to <br />sufficiently explain the project purpose, scope, cost and schedule prior to submitting <br />capital budget requests. After predesign completion, requests should be submitted <br />through the official capital budget process. <br /> <br />· In the interest of forming true state-local partnerships, local governments should be <br />willing to provide substantial non-state funds as a condition of receiving state bond <br />appropriations. These local match requirements are expected to provide at least <br />50% non-state funding for project design and construction costs. <br /> <br />· To avoid overly-optimistic expectations among local governments, the state should <br />not provide partial appropriations for design funds in any given year unless the state <br />is fully prepared to provide subsequent construction funds. Design funding should <br />not be appropriated for the exclusive purpose of buying time, mollifying project <br />proponents or pushing project construction tails into future legislative sessions. <br /> <br />· Political subdivisions should develop a detailed operating plan that ensures local <br />funding of project operating expenses, without any state assistance. <br /> <br />11/20/97 02:11 PM <br /> <br /> <br />