Question

Recommend strategies a municipality might use if they run out of cash. Explain why those strategies would be best for the organization.

Answer 1

When a municipality runs out of cash then the first and the foremost strategy they should use is to shore up their revenues. Besides fees the municipality that has run out of cash should look at diversifying its tax base. Tax base can be diversified by shifting a portion of property taxes to other taxes. They should also look at grant funds that are available for specific services. Municipalities should also look at maximizing their investment income by making use of effective cash flow management.

The concerned municipality should also look at setting spending priorities. It should focus spending on areas that provide greatest benefit. It should try to recover as many costs as possible. It should set fees for public services at levels so that it is able to recoup the true cost of providing those services. These strategies will work best for the organization as it will focus on maximizing revenue generation on one hand and on the other hand will look at optimizing costs.