There are a number of programs designed to encourage local governments, nonprofits or corporations to spend their local and state taxes on investments – such as infrastructure, public safety, housing and infrastructure.
But many more are set up with no strings attached, designed to be simple and quick to implement and offer a guaranteed return to the taxpayer. These types of contracts could have more of a “win-win” situation for the municipality if, for example, the city and the private firm are both getting local tax revenues back, but have a chance of earning a profit if the investment succeeds, or if they both make money.
The state is in a similar predicament; the states’ governors are trying to figure out how to make their state-run pension programs sustainable long-term. So far, they’ve given each agency $300 million to put toward projects for the state, and are counting on that allocation of funds to lead to the savings. But how much money will the states need? Will it provide enough to pay all of the benefits that state workers are entitled to under state law, while saving them money to provide additional benefits? The state says that it is working with individual agencies on how to find the answer to this question and that it hopes to have some answers for lawmakers by the start of next year.
So, the question that every municipality needs to ask itself is: How will these block grants do? If the answer is not very well, there are plenty of solutions.
In 2015, the U.S. Department of Commerce made it clear it intends to make block grants permanent. The department also has started to hold auctions in which firms can bid to receive more than $1 billion in federal “incentives” for capital investment projects.
But the department has been less aggressive with its block grants than most federal departments. According to the Washington Post, it hasn’t conducted any of these auctions since the early 2000s.
That’s good news for states and municipalities facing an economy where demand for businesses and new jobs outpaces supply for labor and materials. But when it comes to how to make block grants more effective, there’s no shortage of possibilities – some of them involving cutting costs, such as by changing a firm’s approach to the work that is to be performed.
Here’s a look at some potential ways to boost block grants beyond the usual things the government might get involved in without requiring a lot of new laws or even new money.
Ease-of-doing-business
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