Our country has had eleven recessions since WWII, including the recession beginning in 2008, the deepest and longest. It’s not easy to cut spending and even harder to raise taxes. Governments in financial stress find themselves on the brink, but no one decision or new idea will, by itself, restore stability.
Some government services should make money for taxpayers. Examples include parking garages and lots, airports, marinas, golf courses, stadiums and similar assets. Often, government managers lack the specialized expertise and incentives to operate these valuable assets at peak efficiency and provide public services at top levels. DSI Civic principals have helped governments identify private operators, prepare requests for proposals, negotiate operating agreements and provide oversight metrics to effectively unleash new and lucrative revenue streams to benefit taxpayers.
Together we develop a clear path to results. Gaining control of costs and maximizing revenues go hand and hand.
DSI Civic starts with an extensive analysis of revenue streams. We determine whether revenues grow with the economy and whether they are being effectively enforced and collected. We help clients determine a mix of revenues that can sustain essential services going forward, even in a volatile economy.
Other assets, while not lending themselves to operational partnerships, have innate value in the hands of private investors and can be monetized through leases. Examples include tollways, parking meters, transit stations and the like. In each instance, the key is professional guidance in structuring the agreements to maximize revenue and protect citizen-users of the services. Often these partnerships involve modifying existing user charges or fees, thereby optimizing the rates to produce the growing revenue essential to a diversified revenue mix. These non-tax revenues can become a significant part of a balanced strategy to help governments work their way out of deficit—especially when the long recession has deflated traditional tax revenues.
DSI Civic partners led or directly assisted in the successful implementation of several public-private partnerships, each with a non-core government function and service. Some governments have chosen to lease the rights to some or all of the surplus revenues (but retain ownership of any assets) and receive part or all of the expected surplus revenue in advance. This is often referred to as monetization of assets or securitization of revenues. In these cases, we recommend using the proceeds to reduce existing debt.
For a government plan to be sustainable, revenues need to grow—with the economy and with the community. That means more reliable and diverse revenues, just like a good retirement or investment plan.
DSI Civic executives have the experience to help governments maximize the value of their assets while also protecting taxpayers and customers. We help governments make the most of their balance sheets during these difficult times.