Local Funds

Some communities are able to finance improvements to broadband networks and digital inclusion programs primarily through local funds. When available, local funding is the option that provides the most control and flexibility. However, this option also requires the local government to bear all of the financial risk associated with the project or program.

General Fund Allocation

• When funding is available, communities may be able to finance certain broadband access or digital inclusion projects through allocations from the general fund. This option provides the local government with the most control, but general fund resources are often heavily burdened by competing priorities.

Municipal Bonds

• Bond financing is a common strategy used by local governments to fund large-scale infrastructure investments. Through this financing mechanism, the cost of the capital investment is amortized over a long period of time, such as 20 years.
• General obligation bonds are backed by the taxing authority of the local government. Because property taxes are levied to repay the debt, in most cases, voters must approve issuance of general obligation bonds.
• Revenue bonds are backed by anticipated revenues from the project being financed. Public utilities have used this financing model to provide the infrastructure improvements needed for high-speed Internet.

Special Taxing Districts

• Many communities use special taxing districts to fund investments or programs in specific areas. Tax increment financing districts and special assessment districts are two models commonly used to improve the infrastructure in certain defined areas. In both models, the cost of the investment is shared by taxpayers within the designated areas.