Raising Money by Charging Fees
-Making profits through development deals is one of the more aggressive methods used by enterprising governments. It is also riskier than many of the alternatives.
-Perhaps the safest way to raise nontax revenue is to simply charge fees to those who use public services. The public clearly prefers this approach.
-User fees have two advantages: they raise money, and they lower demand for public service. Both help balance public budgets.
Spending Money to Save Money: Investing for a Return
-By measuring their return on investment, people understand when spending money will save them money.
-Businesses focus on both sides of the balance sheet: spending and earning, debits and credits.
-But governments look only at the spending side of the ledger. Ignoring returns, they concentrate only on minimizing cost. Frequently they refuse even to consider significant investments that would generate significant returns—simply because of the cost.
-They postpone spending on road repair until the road has to be rebuilt, at three times the cost of simple resurfacing.
Turning Managers into Entrepreneurs
-If managers cannot keep any of their earnings, they are not likely to pursue them. If we want public managers to think like entrepreneurs, we have to give them incentives to do so.
Shared Savings and Earnings: Mission-driven budgets solve this problem by allowing departments to keep all or part of any funds they save or earn.
Innovation Capital: In the private sector, businesses routinely raise capital to pursue attractive investments. In most governments, managers can raise innovation capital by only securing an extra appropriation from the council or legislature.