In recent years, Louisiana lawmakers have used all sorts of stopgaps to balance the state budget, from selling off prisons and hospitals and offering amnesty to deadbeat taxpayers to sweeping funds meant for specific purposes into general state spending. And once again, they’ll need every available tool as they chip away at a projected $1.6 billion deficit this spring.
Amid the ongoing budget challenges, the state Department of Transportation and Development about a year ago tried something new to help fill its coffers—namely, advertising. Insurance giant State Farm now pays $250,000 a year to put its logo on DOTD’s Motorist Assistance Patrol vehicles. The company has similar arrangements with nine other states.
As Business Report details in its new cover story, DOTD hopes the State Farm deal is just the start. Eventually, the department wants to raise $2 million a year by selling naming rights on various state properties, possibly including bridges, ferries and rest stops. That’s not much money compared to an annual budget of more than $560 million. But every little bit helps, and DOTD says State Farm is helping to improve the MAP service.
“I can tell you certainly, on behalf of the MAP program, this sponsorship program has been a positive experience,” says Stephen Glascock, who administers intelligent transportation systems for the department.
As tax receipts struggle to fully rebound from the recession, public-sector entities across the country are selling advertising, sponsorships and naming rights to private companies. In theory, such partnerships are a win-win: Governments reap extra money, while companies gain extra eyeballs.
But public officials who go this route must tread carefully to avoid ethical dilemmas and probably shouldn’t get their hopes up too high about the benefits. And potential advertisers should understand that associating their brands with government comes with risks as well as rewards.
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