Cash Cow

Cash Cow

The Merriam Webster dictionary defines “cash cow” as  “a metaphor for a ‘dairy cow’ used on farms to produce milk, offering a steady stream of income with little maintenance.”

Many cities depend on business license and sales tax revenues, among other sources of income. But quite often,  the monthly fees for a municipality’s monthly water and sewer are considered the only constant revenue stream. Such fees are often the easiest for a city to continually increase. A city on its own can raise the fees that it charges on a yearly basis, whereas sales tax revenues remain relatively constant and require other measures.

If a city, for example, met its payroll obligations by resorting to using its water and sewer funds instead of its general fund, its financial health might be questionable. Good budgeting should allow a city to anticipate the general fund’s fluctuations in its yearly revenue stream.

But such things have been known to happen. That’s why it’s nice sometimes to have a “cash cow.”

 

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