Ward of the State: New Haven’s Use of Federal and State Grants in the Financing of Public Bridges

Abstract

New Haven railyards, connecting the city’s downtown with its harbor. This time the city government was onboard. With the cooperation of the local congresswoman, the Mayor testified before Congress in pursuit of federal funding. A $19 million earmark was inserted into the transportation appropriations bill. The $32 million bridge opened in 2003, funded almost entirely by federal and state grants. The Grand Avenue and Church Street Bridges illustrate a dramatic change in the financing of New Haven’s bridges. One hundred years ago, all bridges within the city, even those ordered by the federal government or located on state highways, were constructed using city funds raised through bond issues. Today, almost all locally owned bridges within the city, even those that mainly benefit New Haven residents, are primarily funded through federal and state grants. Of the $12.55 million the city will spend on bridge construction and rehabilitation in 2009-2010, only $490,000 will come from municipally raised revenues. The growth in federal and state grants, for all types of goods and services, has occurred across the country. Between 1902 and 2004, federal government grants to state and local governments increased from less than 1% of state and local revenue to more than 20%. Since 1946, state grants to local governments have more than tripled, from 1% of GNP to 3.3%. Federal and state grants now comprise approximately 38% of total local government general revenues. In this paper, I will examine this trend by considering the financing of bridge construction, rehabilitation, and maintenance in New Haven between 1790 and 2010. I will ask two questions. First, what factors explain the change in funding sources? Second, does the resulting system of federal and state grants promote public welfare? In Part II of this paper, I will review three theories that may explain the change in funding sources. In Parts III-VI, I will survey the history of bridge finance in New Haven, moving through eras of private sector finance, municipal finance, and state and federal finance. In Parts VII and VIII, I will consider the causes of these changes and their effects on public welfare.