Turning one-time money into ongoing revenue

There are many “golden rules” in public administration. One of the most often repeated is “don’t spend one-time money on ongoing costs,” or to put it another way, don’t balance your operating budget with one-time money. This is a very good general rule, with only a few exceptions that we won’t dive into here. So, with a lot of new one-time funding coming from the federal and state governments, a lot of counties, cities, and towns are looking for places to spend it. 

A lot of focus has rightfully been on public capital projects, the natural target for one-time funding. We won’t try to dissuade anyone from investing in quality capital projects, but if you are scraping the bottom of the barrel for less quality projects, like unfinished highways to nowhere (you know who you are), do not have enough projects in your planning pipeline to spend the money in a timely fashion, or you are a locality that is consistently budgeting deficits each year (you also know who you are), then let us propose an alternative. 

What if you could turn your one-time money into ongoing revenue, either by generating new revenue or reducing expenses annually? We are here to tell you that it is possible. Obviously, every revenue source comes with its own strings attached, but think outside the box and ask about what is possible to truly serve the community, not just what is typical or expected. 

Increasing Revenues

This is the perfect opportunity for economic development spending -  spending money to make money - such as building an anchor project for a downtown redevelopment. An effectively crafted project could spur increased investment in area real estate, generating new property tax and sales revenue. Localities could also invest in improved infrastructure in areas in need of private development or acquire subpar properties to either remove them from the residential or commercial stock or turn them over to another entity for development. 

There are also ways to increase development activity at a lower cost such as revising zoning codes or reforming the permit process. This work can be done by outside consultants (like us) or by leveraging internal resources, as they have done so successfully in Syracuse, NY. Any of these approaches could generate revenue by adding property value to the tax assessments and creating main-street economic activity. 

Reducing Costs

It’s never anyone’s favorite topic, especially with us public administration types, but let’s talk about risk. Just by opening our doors or picking up the trash, local governments are exposed to significant risks and these risks add up to a lot of money spent each year through settlements, judgments, and insurance premiums.

Reducing those risks will save you money. You might save by investing in additional training or equipment for operations staff to reduce accidents, improving IT security for things such as ransomware attacks through backup servers, or avoiding lawsuits by implementing a body worn camera program (BWC). The cost-benefit for each approach would depend on specific factors for a specific locality. For example, one study from Rialto, CA found implementing BWCs resulted in $4 saved in resolving complaints for every $1 spent on BWCs. 

You could also save through other strategic investments such as energy efficiency programs or purchasing more efficient equipment. Energy efficiency programs such as LED conversions, demand response, or installing solar panels can provide significant reduction in utility costs and substantial long-term savings, especially as energy costs continue to rise. Starting in 2014, Yonkers, NY saved $1 million each year on utility and maintenance costs by upgrading its street lights to LEDs. 

Investing in efficient equipment that allows you to reduce other costs such as semi-automated trash trucks (or even autonomous vehicles (AVs) for those localities that have deferred investment to the point where they could “jump” ahead) could save you on workplace injuries and personnel. 

We hope these few ideas help spur your creative thinking about how to spend one-time money in the best way possible. 

Still need some help? Linnett Loving works with you to design and action on strategies tailored specifically to your needs. Reach out to learn how we can help you!