Budget Time: Balancing the New and the Old

Budget Time: Balancing the New and the Old

One of my daughters is in the market for a used car.

Never one to miss an opportunity to teach a life lesson (my poor kids!), I’ve been using our conversations about this important decision to talk about short-term and long-term costs.

We all know the drill.

Yes, that classy older import might give the driver some “coolness” points (or some street cred), but it’s gas mileage is half that of the subcompact down the row. While the price of gas has dropped in the last two years, long-term trends might suggest a difference of 15 mpg will add up to a major difference in operating costs.

What about replacement parts and repair costs? Is it cheaper, or more expensive, to fix the water pump, the timing belt, the transmission, on this car, or the next car in line?

And so on.

Buying a car often is an emotional buy. Consequently, many of us make less than economically optimal choices when we get a set of wheels.

This isn’t just about cars, of course. We human beings are prone to a variety of emotional inducements and flawed short-term versus long-term analyses that lead us to buy what we cannot afford to keep. It can be hard to resist those temptations, and hard to recognize our own flawed calculations.

I’m musing on this in part because of my daughter, but in part because the budget season for our local governments is swinging into high gear. In public service as in personal life, it can be hard not to get hooked on the emotional dimension of a financial decision, hard not to make the emotional buy.

Just like the family car, everything governments buy has an operating cost, including short- and long-term maintenance and eventual replacement. Sometimes that cost seems fairly low, especially in the early years. A new road segment does not need to be repaved or restriped for some number of years. If the road relieves congestion or facilitates access or fosters desired development, public officials and citizens alike celebrate its opening with ceremonies and selfies. And why not? The community has secured an asset; life is good.

Of course, roads wear out. Potholes appear. Stripes fade. Money must be set aside to take care of these things, but that money doesn’t buy the same emotional high we felt at the dedication. Just like in our personal lives (think of the relative excitement of the family when a parent rolls into the driveway with a new car versus returning from the mechanic after having maintained the car), preserving what we have just isn’t as thrilling, or treated as though it is as newsworthy, as getting something new.

It is human nature to celebrate what is new. It also is human weakness to neglect preservation of what we already have. We do it with our physical bodies, with our physical plant, even with our employees . . . or, at least, many of us do.

But every new acquisition comes with a long-term cost.

If we started with the real life-time cost of the asset we are thinking of building or acquiring, we might think differently. If we thought about the real life-time cost of the assets we already have (water and sewer pipes, for example, as well as roads and buildings) and commitments we’ve already made (like pensions and programs), we’d probably discover some underinvestment in preservation to which our attention should be turned.

Then, perhaps only then, we can think about what’s new.

This is hard in public service, harder, in fact, than in private life. We not only must overcome our own personal bias toward the new, but we must help our citizens overcome that bias as well.

It’s a balancing act, to be sure. Our citizens and other residents and property owners and business owners all contribute from their income to the resources our local governments have to provide services. Just as a family may celebrate by going out to eat on occasion even when there are debts to be paid, our cities appropriately choose to celebrate, to do something new, even as we struggle to preserve what we have and to fulfill our existing commitments.

The challenge is to strike the right balance.