Governments Need to Get Creative on Revenue

As the current economic slump persists we continue to see innovation and creativity from the businesses who are successfully surviving the recession. No one has been immune to the effects of the current economic environment, and the local and state governments that were already in financial trouble before the recession hit are especially impacted by the downturn. It’s time for government to take a page from the business playbook and find sources of revenue that do not involve taxation. The city must look at its resources and find ways to leverage them. In March 2008, VICA released a report that outlined 50 ways the City of Los Angeles could balance the budget and get its finances back in the black. Dubbed the VICA 50, the suggestions were separated into two categories: revenue generation and ways to balance the budget. The latter section mostly included ways to reduce waste, collect on money owed and cut unnecessary appropriations. The revenue generation section compiled 10 business-inspired and inventive ways to bring additional funds into the city. One of these suggestions called on the city to identify opportunities for advertising placement on city-owned property, in parks and explore sponsorships for city facilities. The idea was for the city to get the most out of its assets – one of those being the audience it can provide to advertisers. The city has yet to take any significant steps towards implementing any of these suggestions despite its clear need for new sources of revenue. Advertising placement is a viable alternative to increasing or creating new fees and taxes for the city’s business community. The city of Los Angeles is not the only public entity not seizing the opportunity. The Metropolitan Transportation Authority (Metro) board passed on $500,000 annually that it could have used to help ease a $181 million deficit anticipated in the upcoming fiscal year. The proposal would have allowed beer and wine companies to advertise on agency buses and trains. Instead, board members upheld a 1997 policy that banned alcohol and tobacco ads. Reasons for standing by the 1997 policy mostly cited concern for the forced exposure to beer and wine ads with some moral commentary added to the mix. Board members did not want to force passengers to stare at the ads. But when services are cut and those who depend on public transportation are left immobile, an advertisement for an adult beverage will be the least of their concerns. Agencies and local governments are not the only ones investigating their advertising potential. Gov. Arnold Schwarzenegger is pursuing an idea that would turn overhead freeway displays (the ones that currently provide Amber Alerts and traffic information) into electronic advertising billboards. The plan faces critics and obstacles that include obtaining a waiver for federal highway regulations, but the idea is on the right track. The Governor is examining the state’s resources and looking for ways to maximize the positive results. If the plan does move forward the signs would be upgraded by the partnering advertising company, so the state would benefit from the improved technology and the additional revenue. Our governments and public agencies are not in a position to pass up new opportunities for revenue. Many citizens have already come to terms with the fact that significant service cuts must be made, but tapping new revenue sources could prevent some of these painful choices. As the business community watches our leaders refuse to explore new means of generating revenue, the state and city’s history of using the business community to balance municipal budgets is top of mind. But this is the very practice that has driven businesses out of Los Angeles and California, and will force the ones who do stay out of business. Should Metro have allowed beer and wine advertising? Should governments and public agencies consider selling advertisements as a form of revenue? Email your responses or thoughts about the column to [email protected].