What Is Infrastructure Financing?

What Is Infrastructure Financing?

The terminology infrastructure financing is rather broad and typically denotes endeavors by Federal, State, or local governments to fund and complete vital community projects. These projects can include fitting the pipe for a sewage system, erecting cell phone towers, laying the roads that are frequented by motorists and supply nations with material goods, and building schools for the next generation of consumers.

The thought processes and plans that go into Infrastructure funding and all the inherent concerns of such a plan are anything but simple. This type planning requires months and perhaps years of thought, constant shaping and reshaping the original plan, and multiple trips to the drawing board when things go wrong (as they so often do).

The larger the project, the greater the need for funds and expert thinking get the project(s) under way. The larger the project, the less the margin for error, yet the greater the chance that an error of massive and disastrous proportions may strike.

This is why having a detailed and exhaustive plan regarding the financing of the project comes into play. As governments usually are operating under very strict budgets, and given that the economy has been anything but booming in the last half decade, it is vital that governments tally up how much their proposed project is going to cost the treasury, make exacting plans (yet somehow provide for the inevitable contingency, allowing for some flexibility) and hope that project work goes smoothly and without hitch.

It doesn’t always work out that way.

Often times, governments go horrendously over budget, costing hundreds of thousands if not millions more than originally estimated. This leads to further public outcry, as monies are in short supply and most feel that their government already takes more than reasonable to start with.

Government has shown that it can and will either levy or raise existing tax whenever it deems necessary. While this is not the most ideal way to ensure a sound career in public service, politicians often see no real choice if they want to get extra dollars for the new road in their district, or triple level baseball stadium approved to jump start the economy.

For state governments that have hit bankruptcy levels, they can do what California did recently and contract the bids for vital public work to private contractors, promising substantial bonuses for each day the project is completed ahead of schedule. California hired C.C. Myers to complete some badly needed repair work before a major holiday.

Californians were less than thrilled about it. They had heard the same old song and dance before. However, not only did Myers’ company finish the work well ahead of schedule, he also did it for a substantial amount less than initially thought.

How often does a contractor like C.C. Myers come along?

Governments have to do something to bring budgets under control and get vital infrastructure work completed for the public good, and without going over budget. Long term investments in strong businesses and industries are a possible solution.

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