Helping governments across the US deliver modern public services

24 June 2024

While attention is often focused at the Federal level, State and Local Governments across the United States are critical to both the US economy and to developing and delivering infrastructure and public services. In 2023, $US4 trillion was spent at the state and local level delivering public services, providing social assistance/ benefits, and investing in infrastructure, representing 15 per cent of the nation’s GDP.1 State and Local Governments employ directly and indirectly more than 20 million people and are tasked with making investment decisions in areas ranging from education and health to highways and housing, welfare to community development.2 Consequently, governmental investments and expenditures have a profound effect on the wellbeing of constituents and local economies, serving as a fundamental factor in determining the country’s resiliency, especially in times of crisis and rapid change.

In the last 40 years, State and Local Governments have rarely operated in surplus, and expenditure continues to grow at a faster rate than receipts, with 50 per cent of cities now saying they are less able to manage their budgets compared to last year.3 Running a balanced budget on State and Local levels has always been a challenge that has constrained their ability to significantly invest, with rules meaning that if revenue dips, they need to cut spending. At the same time, in many cases US infrastructure is ageing and a considerable increase in investment is needed in the coming years to tackle this challenge. So, with competing priorities and a growing mandate to spend to find solutions, along with the need for specialist expertise to help tackle these challenges, State and Local Governments have been required to look for more innovative solutions.

Source: Federal Reserve Bank of St. Louis

Rising constituent expectations are also at play. Americans who have become accustomed to being able to seamlessly transact in the commercial world now expect the same ease from the public sector. Taking time off from work to wait in line for civil transactions feels even more inefficient as the private sector digitally evolves.

“The private sector can play a really important role in helping governments solve challenges, capitalise on opportunities and create sustained long-term value for their communities. Providing access to additional investment capital is the obvious one, but it’s also about tapping into new sources of innovation and risk management, and having a reliable delivery partner,” says Michael Silverton, Group Head of Macquarie Capital.


Over the past 30 years, each of Macquarie’s three businesses operating in the US have grown their understanding of the market and have built up networks across it. Macquarie Capital, which advises and invests alongside clients and partners to realise opportunity, has leveraged its international expertise and access to capital to support key social and economic infrastructure projects across the United States.


“We partner with governments across the country, supporting them in addressing unmet community need in a diverse range of areas. Though public service delivery requires a thorough understanding of local needs, many of the challenges that communities face are shared both across the US and globally,” Silverton adds. “As both a global business and local partner, we can take the best lessons from our work with governments around the world and tailor them to meet US needs.”

Macquarie Capital has expanded both within and beyond infrastructure – including into technology and services – to offer solutions in areas ranging from transportation to education, healthcare, governance, energy and telecoms.

Teams from across the business are working across the public sector in varying capacities, spanning both principal investments and advisory, in such areas as education, defense and government services. 


The Infrastructure and Energy Capital (IEC) team, which applies deep technical knowledge and invests the Group’s balance sheet in areas of economic and social opportunity, has played a leading role in complex infrastructure projects such as:

Goethals Bridge Replacement

The first surface transportation public-private partnership (P3) project in the Northeast US

Elizabeth River Tunnel

A project to upgrade key arterial roads in Virginia

Pennsylvania’s Major Bridge P3 Program

Accelerating the replacement and rehabilitation of major Interstate bridges in the state

Macquarie Capital’s Growth and Technology team invests in technology that can streamline public service delivery, bring administration efficiencies to the sector, help make greater use of data and analytics, and advance digitalisation, including:


A leading provider of digital government services and payments available to more than 100 million residents across North America

Earth Resources Technology

A full-spectrum provider of scientific, engineering, environmental and technology services and solutions for US Federal Government agencies


A leader in deployment of low-code/no-code IT platforms rapidly being adopted across government agencies, allowing them to accelerate their digital modernisation


P3 projects allow for greater private participation and risk allocation in the delivery of infrastructure and are the mechanism of choice in the US in this sector. In 2022, a record $US40 billion-worth reached financial close,4 the majority being large-scale transport and social infrastructure projects that our IEC team specialise in.5 For example, we are currently playing a leading role with our partners in the Georgia DOT P3 Express Lanes Program. This program will significantly reduce travel times and accelerate construction delivery schedules. Private sector participation across the board has a significant role to play in filling the $US2.6 trillion infrastructure investment gap in the United States.6

“More government bodies are embracing P3s as a delivery tool, especially for large, long-term infrastructure projects, recognising them as a way to tap into private sector capital and expertise, share risk, and outsource project management – all of which increase the likelihood of them getting delivered,” says Geoff Segal, government affairs lead for IEC at Macquarie Capital.

Since its first project in the US in the 1990s, Macquarie has combined its project development expertise, financing ability, understanding of risk approaches, and execution strength to become an industry leader in transportation P3s in the US.

America’s infrastructure investment gap

Funding needs of major infrastructure sectors in the US (2016-2025)

Source: ASCE

At the same time, Macquarie sees opportunities for the private sector to go beyond P3s and to help states and cities plan for future demands on existing infrastructure and drive growth and attract investment to deliver long-term community prosperity.

“P3 projects are in our DNA, but our role is evolving to one of partnering with governments to identify and recommend broader solutions to the challenges of changing demographics and competing for regional economic growth,” Segal says.

One example is assisting states in maximising inward investment – especially in advanced industries such as clean energy, semiconductors and electronics – and helping them capitalise on economic opportunities from legislation such as the Infrastructure Investment and Jobs Act, CHIPS and Science Act and Inflation Reduction Act. 

Since 2021, private investors have announced $US525 billion worth of investment in advanced industries.7

“Manufacturers are often reluctant to commit investment until the foundational infrastructure is in place, but the state or city is also understandably reluctant to put the infrastructure in place until there's an investment commitment,” says Segal.

“Bringing in a private sector partner with a diverse skillset, developer mentality and access to balance sheet can drive inclusive economic growth at the local level by providing governments with more bespoke funding solutions.”

Involving the private sector early can also make projects more likely to succeed and deliver greater value for money by transferring responsibility for their delivery and ongoing management from a public body to one experienced in bringing together multiple parties and clear accountability.

Realising new ideas and solutions, encouraging risk sharing and driving accountability tie back to Macquarie Group’s principles of Opportunity, Accountability and Integrity.

“Knowing how to find the right partners and to get people to work together, having a solid understanding of risk allocation and accountability is critical in being able to deliver projects of the scale governments increasingly need to undertake,” adds Segal.


Technology and Innovation

Public sector innovation faces a unique set of challenges, including complexity, increasing budget constraints, workforce transitions, mission creep, demanding constituencies, long procurement cycles, and the critical nature of government services. Macquarie Capital Growth and Technology (MCGT) recognises that these factors demand a specialised approach to investment, requiring deep and relevant expertise.

Macquarie has been a partner for the public sector for decades, and it began to invest heavily in technology and service-oriented companies that support federal, state, and local agencies though MCGT ten years ago.

Larry Handen, Global Head of Macquarie Capital Growth and Technology, explains that the public sector differs from business-to-business and business-to-consumer, investing in three important ways.

The first key differentiator is the complexity of government agencies and their procurement processes. “Without specialised sector knowledge and experience,” says Handen, “investors can quickly become a liability.” When governments partner with investors who focus on the public sector, like MCGT, it ensures they understand the unique needs and challenges they face.

Secondly, Handen emphasises the importance of building trust with government agencies. “Agencies place extensive value in long-tenured relationships,” explains Handen. “These trusted relationships need to be built and sustained over time. This requires considerable patience and resources.”

“Lastly, the critical nature of government services cannot be overlooked. “The cost of failure is profound,” Handen says. “Solution failure for government agencies can be catastrophic, so vendors are expected to embrace the mission with the same level of dedication as the agency itself.”

At Macquarie, we recognise that government solutions have a significant impact on people's lives. Therefore, we prioritise partnering with companies that are as dedicated to public service as the government agencies themselves.”

Larry Handen,
Global Head of Macquarie Capital Growth and Technology

Partnering for the future

Evolving public service delivery in the US to meet the growing demands of population growth – and to deliver economic prosperity for communities – will require both the public and private sectors to work together over the coming decades. Against formidable obstacles, thoughtful partnership between public officials and the private sector can unlock significant progress and deliver real value to all public stakeholders.

“We have the good fortune to speak with numerous leaders at all levels of government, throughout the US and in a wide variety of agencies,” Handen says. “These individuals are committed to providing innovative and beneficial solutions to their citizens in an abbreviated time frame and at considerable savings to past solutions. Engaging and managing commercial solution providers are an increasingly important part of that process. At Macquarie, we will continue to look for opportunities to contribute to this positive momentum.”

Silverton also sees the collaboration as key to addressing problems.

“The challenges we face as a society are often complex and not something either the public or private sectors can solve alone. We need to work together to overcome them with new ideas and innovation,” he says. “Looking ahead, not only will access to capital be increasingly relevant for the government sector, but so will access to specialist skills and project delivery expertise, and the ability to bring the right people to the table to realise these projects for our communities.”