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Back to Archives | Back to June 2010 Contents 

Generating New Revenue Streams

Paul LaCommare, Commander, West Covina Police Department, West Covina, California


downward spiral in California city governments’ revenue streams has occurred for the last five years starting with the housing bubble that burst property tax returns by 40 percent. Warnings contained in the California Department of Finance’s Economic Indicators, January–February 2008 report state that

the current economic slowdown afflicting California and the nation is the result of a one-two punch. The first blow fell in 2005 and 2006 when real estate markets peaked and began a gradual slowdown. Late in 2006, it appeared that despite some losses, home sales and prices had stabilized. The second blow, though, fell in 2007 when the subprime lending meltdown and rising foreclosures led to the implosion of real estate mortgage markets. Residential real estate markets were jolted by rising inventories as too many homes were on the market and the number of qualified buyers, particularly those looking to move up, dwindled. Ominously, as 2007 progressed, the likelihood steadily increased that rather than just suffering through severe corrections in breal estate and home construction markets, the economy might run into a full-fledged economic slowdown.1

The common reaction to a budget crisis is reducing personnel and cutting services. The focus of this article is to provide police agencies with an alternative to personnel and service reductions. This alternative could help the survival of a city and maintain or expand police service through generating new revenue streams as a proactive approach to meet the fiscal crisis of today and the uncertain future of tomorrow.

While generating revenue streams is not new to most agencies, the focus and resources necessary to meet current and emerging public safety needs are unprecedented in law enforcement’s history. Law enforcement executives are accustomed to the ebb and flow of fiscal budgets. The current trend, however, is much more far reaching and will impact almost all cities in California and most likely all communities in the United States.

Five years ago, the current state of the economy facing cities and counties was not even a concern. Now, however, many law enforcement agencies are facing the reality of severe budget cuts, reduced workforce, and the elimination or reduction of many law enforcement programs. Today, police chiefs are being asked to look for ways of economizing, increasing efficiency, eliminating redundancies, and finding revenue sources.

This trend will be prompted in two possible ways. First, increasing financial pressure will require more severe budget cuts to the point that many agencies will be able to provide only basic services. Second, cities will begin to see successes at nearby agencies and look to new revenue streams as a panacea to forestall reduced services or even bankruptcy. Based on the research for this article, there is a clear presumption of need for law enforcement to generate new income streams. A first necessary step in that process is to examine possible revenue-generating ideas.


Possible New Revenue Streams

A group of experts in the fields of city government, business, real estate, and entrepreneurship assembled in April 2008 to identify possible new income streams that could be initiated by law enforcement.2 Their suggested new revenue streams serve as an example of ideas that can be generated in a short period of time. Each idea must be weighed against the feasibility of implementation, profit potential, and appropriateness for law enforcement involvement. Their most prominent recommendations were

  • fees for sex offenders registering in a given jurisdiction,

  • city tow companies,

  • fine increases by 50 percent,

  • pay-per-call policing,

  • vacation house check fees,

  • public hours at police firing range for a fee,

  • police department-run online traffic school for minor traffic infractions,

  • department-based security service including home checks and monitoring of security cameras by police department,

  • a designated business to clean biological crime scenes,

  • state and court fees for all convicted felons returning to the community,

  • allowing agency name to be used for advertisement and branding,

  • triple driving-under-the-influence fines by the court,

  • resident fee similar to a utility tax,

  • tax or fee on all alcohol sold in the city,

  • tax or fee on all ammunition sold in, the city,

  • public safety fees on all new development in the city,

  • 9-1-1 fee per use,

  • police department website with business advertisement for support,

  • selling ride-a-longs to the public, and

  • police department–run firearm safety classes.

In addition to concepts that may lie ahead, there are also many examples of revenue-generating ideas that have been tried and proven in actual use.


West Covina’s Revenue Service Model

The West Covina, California, Police Department is a midsized municipal police agency in Southern California. The concept of developing a police revenue service in West Covina began in the 1980s. In 1984, the department was searching for a new computer software system to manage its computer-aided dispatch and records management system (CAD/RMS). Dissatisfied with the current offerings on the market, the department decided to develop its own CAD/RMS system. The department provided training to employees who later wrote and developed a complex software system to run CAD/RMS. The system was implemented at West Covina and was successful. By the late 1980s, the city leased the program to another agency and began marketing in earnest.

In 1995, the West Covina Service Group was formed as an enterprise and has been in operation ever since. Currently, the West Covina Service Group’s CAD/RMS system is running in 21 police agencies throughout the United States. On top of the more traditional methods of revenue generation, which include impound fees, booking fees, and driving-under-the-influence investigation fees, the West Covina Service Group generates about $1.75 million annually through its software system for the city’s use. The West Covina Service Group also provides all CAD/RMS services for West Covina, resulting in a more than $500,000 annual savings for a total ancillary benefit of $2.25 million dollars per year.

Historically, the West Covina Police Department has spent a great deal of time and energy in the field of forensics as a method of crime solving. This has led to the development of a forensic lab and expert personnel. The department recognized that many small agencies in the area did not have the resources to process their own latent prints and were frustrated with the extended lag time associated with current services. After recognizing this niche market in 2006, the department elected to offer contracted forensic services to other agencies. This also has become a successful business venture, netting more than $42,000 since inception. Beyond monetary issues, the service also has benefitted crime reduction programs through the timely identification of latent prints. A selling point is the Forensic Investigative Unit’s ability to meet a five-day turnaround time on submitted prints or articles as opposed to six months to a year through traditional county or state services.

During 2008 and 2009, the West Covina department also implemented other ordinances and programs that increase effectiveness, generate revenue, and mitigate the cost of personnel management. Two of them follow:

  • An administrative citation process for party noise. Modeled after other California agencies, the party ordinance allows an administrative citation to be issued at loud parties where the music is plainly audible 50 feet from the property line. The first citation is $100, a second $200, and a third or subsequent citation within 12 consecutive months is $500. The goal of the ordinance is to reduce repeat party calls, improve the quality of life for surrounding residents, and generate a revenue stream to offset the cost of response and enforcement.

  • An ordinance fining parents for child’s graffiti. The graffiti ordinance imposes a $1,000 administrative fine to the parents of juveniles arrested for graffiti crimes. The juvenile is still processed independently through the criminal justice system. The goal of this new ordinance is to promote greater responsibility from parents, reduce the number of repeat offenders, and generate a revenue stream to compensate the city for enforcement efforts.

Both of these administrative citations are too new to provide statistical results, however they show promise in the areas of crime reduction and revenue generation.

One tried and successful idea that has greatly enhanced the West Covina Police Department’s ability to maintain services while decreasing costs is the 960 program. Under the Public Employee Retirement System (PERS), retired employees can work up to 960 hours per fiscal year at a PERS agency with no penalty to their non-medical retirement. The West Covina Police Department has retained some personnel immediately after retirement on a contract in their same role. They are paid their previous hourly rate without benefits. This saves the city approximately 40 percent to 50 percent per employee, while maintaining needed coverage. On average, the department can save the equivalent of one full-time position for every two to three 960 positions filled. This is a tremendous cost savings and has the real benefit of maintaining services at existing levels.

West Covina has focused on revenue-generating programs that offer side benefits to the department such as CAD/RMS technology, crime reduction, and improved quality of life for residents. Future revenue-generating programs may be focused more on profitability and be increasingly varied from the general law enforcement mission. Current trends affecting the economy, criminal justice, and the future must be considered as others scramble to fill gaping holes in their fiscal projections.


Act Now

The future of policing is in jeopardy based on the current and predicted financial futures of cities. Law enforcement will not cease to exist, but services will be reduced and personnel lost if action is not taken. Cities have few options in this matter. Cities can attempt to raise taxes; however, the public is already feeling the detrimental financial effects of the economy and may be reticent to acquire more financial liability. Cities can reduce the costs associated with law enforcement through budget cuts. This option has already been exercised by most cities and in many cases, further budget cuts can only be accomplished through the loss of personnel. Table 1 shows the most common actions initiated to lessen the impact of economic changes from agencies across the United States.

Actions Initiated to Cope with Economic Changes% of Agencies
Eliminate/change take-home car policy27%
Initiate/increase use of bicycles23%
Initiate/increase use of hybrid vehicles18%
Initiate/expand use of foot patrols17%
Implement facility energy savings programs17%
Initiate/increase use of two-person cars15%
Initiate/increase use of Segways13%
Adjust work hours of staff12%
Initiate/expand use of telephone report units10%
Source: PERF 2008 Violence Crime Survey

Some law enforcement professionals will balk at the strain of generating new revenue sources. Agencies must be extremely careful during the selection process when they are choosing a type of revenue-generating program to implement. Each program must be evaluated against the strengths and weaknesses of the organization. Just as important, each revenue-generating idea must be evaluated to determine if it is within the highest standards of law enforcement. Many ideas, although legal and possible, will not meet this standard.

The level of importance given to generating new revenue streams by agencies will be based upon the agencies’ individual needs and the resources available to them. In some cases, this alternative could forestall or prevent city bankruptcy. In the majority of circumstances, generating new income streams could provide the resources necessary to relieve part of the financial burden on cities and allow police departments to maintain current services and personnel levels. In the best-case scenario, new revenue streams would be sufficient to expand police services to the public. In all cases, the management of law enforcement agencies has the responsibility of examining how it can reduce public effects of a poor financial climate.


Recommended Steps

To fulfill responsibilities to the public, law enforcement must prepare for the worst while hoping for the best. These recommended steps concentrate on the most likely trend of increased financial strain:

  • Law enforcement executives must evaluate their agencies’ financial situation to determine the necessity of developing new revenue streams. While all cities will have certain factors in common, many characteristics will be different and call for a different level of need for new revenue sources. This evaluation should be ongoing as most financial situations develop rapidly. Executives should seek to identify the overall economic trend and its projected impact on the department. This assessment will determine the extent of resources and the need for the development of new revenue streams.

  • Once the executive staff of an agency has determined that new revenue streams are necessary, they must commit and communicate. Much of this responsibility rests with the chief of the agency. Because this project is outside of the mainstream duties of law enforcement, the chief must communicate the vision and the necessity of success in this endeavor. The level of commitment displayed by command staff will in great part determine the success of the new endeavor.

  • Agencies should involve many people in the process of generating ideas for new revenue streams. This recommendation is very important because the more people who are involved, the more likely an agency is to find the ideas that will work best in its jurisdiction. The solicitation of ideas should extend past department personnel and include the remainder of the city and community members.

  • Agencies should establish a broad-based committee to evaluate new revenue stream ideas. This committee should be charged with evaluating each idea’s profit potential and determining if the strengths and weaknesses of the department could support a successful implementation. Most importantly, the committee must assess if the idea falls within the standards of the department, the city, and the general law enforcement community.

  • Once one or more revenue-generating ideas are chosen, the agency must spend the time and resources necessary to develop strategic implementation plans. This background work will greatly increase the agency’s chance of success. The department also should focus on goal establishment and evaluation methodology.

  • A critical part of implementation is the development of project support. Determine the stakeholders and actively build their commitment level. Lack of political support can sabotage even the most viable project.


The Future

To be successful and meet law enforcement’s responsibilities to the public, several factors must be achieved. Police executives must be willing to adapt to the demands of the external environment in their respective cities, which likely are navigating their own financial crises. Law enforcement has a clear responsibility to meet financial challenges to provide for the safety and security of communities. Executives must be knowledgeable about the rapidly changing environment and adapt their organizations to meet these challenges. The alternative of generating new revenue streams is a viable, responsible option that will allow law enforcement to continue to provide excellent service to the public. This fiduciary responsibility and response to the financial crisis may be the most significant challenge law enforcement has faced in recent history. Each agency possesses talented personnel whose abilities exceed the daily requirement of police work. In working with leadership, employees may uncover and develop new revenue streams that could greatly assist their cities. This is the time to broaden the traditional definition of police responsibilities and include a proactive approach to developing new revenue streams in the current economy. Those agencies that are willing to envision the future and then plan and act to provide future financial resources will be in the best position to provide public safety. ■


Notes:

1California Department of Finance, California Economic Indicators, January–February 2008, 3, http://www.dof.ca.gov/HTML/FS_DATA/INDICATR/2008_CEI/CEI_Jan-Feb_2008.pdf (accessed April 27, 2010).
2The field experts were assembled by the author in April 2008 for a nominal group technique.


Sources:

Jim Madaffer, “President’s Message: Protecting Vital Community Services and Our Quality of Life,” Western City (April 2008), http://www.westerncity.com/Western-City/April-2008/Protecting-Vital-Community-Services-And-Our-Quality-of-Life (accessed April 27, 2010).
Judy Mitchell, “President’s Message: It’s Time to Get Back to Basics.” Western City (February 2009): 3, http://www.westerncity.com/Western-City/February-2009/It-rsquos-Time-to-Get-Back-to-Basics (accessed April 27, 2010).
Brendan Schlauch, “Business of Government: On the Verge of Collapse,” Governing 21 (July 2008): 57.
Chuck Wexler, “Labor Relations Will Be a Critical Issue as Chiefs Work through the Economic Crisis,” Subject to Debate 22 (December 2008): 2.
Chuck Wexler, Violent Crime and the Economic Crisis: Police Chiefs Face a New Challenge, Part 1, Police Executive Research Forum (January 2009): 5–6.


Please cite as:

Paul LaCommare, "Generating New Revenue Streams," The Police Chief 77 (June 2010): 22–30,
http://www.nxtbook.com/nxtbooks/naylor/CPIM0610/#/22 (insert access date).


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From The Police Chief, vol. LXXVII, no. 6, June 2010. Copyright held by the International Association of Chiefs of Police, 515 North Washington Street, Alexandria, VA 22314 USA.








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