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The critical role of government cost reduction efforts to close budget gaps without raising taxes.
Given the continued fiscal crises government operations face at all levels—federal, state and local—cost reduction efforts must clearly play a major role in balancing budgets and doing more, better, with less. At the same time, government administrations can also pursue opportunities to boost the collection of revenues without raising taxes. The following three proven approaches can help facilitate government cost reduction quickly:
Improve billing and collections. Public organizations can improve their revenue intake in two ways: by applying readily available data mining and analytic techniques and by billing appropriately and collecting effectively.
Optimize pricing. Governments can benefit from private sector expertise when developing pricing strategies for revenue-generating products and services.
Use assets to make money. Government leaders have two options to make their physical and digital assets work harder for taxpayers: sell, rent or lease the assets; and offer premium, value-added services related to the asset for which customers will readily pay.
These revenue-generating opportunities can help governments close the gaps in their budgets without raising taxes or cutting services. By employing ideas and approaches first perfected in the private sector, public leaders can ensure that these initiatives deliver the most value possible to citizens.
At $1.1 trillion, deficit spending funded nearly 31 percent of the 2012 U.S. federal budget—an amount equal to 7.3 percent of GDP. The cumulative state budget deficit was another $107 billion, or nearly 15.5 percent of total state budgets. Among individual states, red ink is everywhere: Texas projects a FY2013 deficit of $9 billion, California $15 billion and Washington $2.5 billion. And the price tag for public services continues to grow. According to Oxford Economics, the cost for delivering public services is projected to total $7.3 trillion, or 34 percent of GDP by 2025.
To help government administrations close the gaps in their budgets without raising taxes, this piece outlines three proven approaches to enable government cost reduction: improve billing and collections; optimize pricing; and use assets to make money. Governments should also keep in mind that creative ways exist to pay for these revenue-enhancing initiatives, which include introducing value-based contracting and using innovative agreements to obtain needed capabilities and services from vendors.
Delivering public service for the future given the continued fiscal crises government operations face presents both a massive challenge and an enormous opportunity. Government cost reduction efforts at all levels must clearly play a major role in balancing budgets and doing more, better, with less. This piece outlines three proven approaches which can help governments boost the collection of revenues without raising taxes:
Improve billing and collections by applying data mining and analytic techniques and by billing appropriately and collecting effectively. For example, in the early 2000s, one state agency partnered with Accenture to replace its obsolete tax processing systems. As a result, the department boosted tax collection revenues by more than $100 million without raising taxes and reduced costs on a per-taxpayer basis.
Optimize pricing. One everyday example is the parking meter in front of a private parking lot. Aligning the fees charged at the meter and the lot can boost revenue and reduce congestion.
Use assets to make money by selling, renting or leasing them or by offering premium services. An opportunity may be to increase the amount of retail space in government building, which studies show operate at barely 50 percent occupancy. Another innovative example comes from Virginia which is selling the naming rights for roads and bridges in the state. Research reveals that the program could generate in excess of $27 million in its first five years and nearly $275 million over 20 years, which the commonwealth will use to build and repair roads.
Many of the revenue-generating opportunities covered in this piece can help governments close the gaps in their budgets without raising taxes or cutting services. To help enable government cost reduction, leaders can pursue the following three proven approaches: improve billing and collections; optimize pricing; and use physical and digital assets to make money. By employing ideas and approaches first perfected in the private sector, public leaders can ensure that these initiatives deliver the most value possible to citizens.
March 26, 2013
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