[bhupy]

I mean, I don't think we can ever agree because "business principles" is a vague phrase that has no official definition. It can mean whatever you want it to mean.

More fundamentally, capitalist businesses try to maximize output of goods and services to consumers while minimizing the input necessary to create & produce them. The difference between the two, the profit, is the incentive to do more with less. This is how we allocate scarce resources to productive ends.

Municipal agencies are also bound by the constraints of resource scarcity. The goal should always be to efficiently provide services to citizens without glut/waste. You're right that municipal agencies shouldn't need to worry about turning a profit, but they should also need to make sure they don't run at a loss. If the input to a municipal service is (subsidized) price + tax revenue, the outlays of the municipal agency are bound by that input. Bonus points if the municipal agency is able to provide high quality goods & services with lower taxes.

The only way we know to accomplish all of this are through standard management practices which, today, are adopted by capitalist businesses.