More roads, less available money
Maybe I should call this entry “what is a capital expenditure” or “accounting 101”. It all comes back to a couple simple concepts. What is a capital investment cost and what is a maintenance cost? Where did our money go since it didn’t go into roads? Read below.
In 2008 Hudson spent about $3 million on Street & Sidewalk Construction programs. That is specifically reconstruction, resurfacing, overlays, crack sealing, etc. That is the cost of maintaining roads. We have more roads today then we did in 2008. And costs have gone up on a per foot repaired basis. We heard the PASCO budgetary miss is because of cost increases and I am looking at an 11 year old expense for our roads. If the cost of road maintenance went up by 3% per year, our current budget would be $4.1 million in 2019.
What are we spending this year? The budget was for $2.3 million. We still have not spent it all so I must think we will come close to that unless we decide to divert a lot more money into our streets quickly. As the Starks say… Winter is coming.
Our roads have received less money over the past few years than they did a decade ago. Where did the money go?
1: A decade ago Hudson decided to buy YDC for $7 million and the only thing we have done with the property is put more money into it. We have not developed it for revenue growth.
2: Starting a couple years ago Hudson put $3.85 million into Velocity Broadband.
3: A couple years ago we bough a new town hall and are renovating it. It will cost over $8 million by the time we are done… I have heard $9+ by the time furniture and final renovations are complete. But lets say $8 million for now.
4: The many millions into Phase 2 that is sitting idle and will not be revenue generating for many years. We all make choices on where our money is used. This was a choice as well.
The fact is our current five year plan shows no cost increase for annual road maintenance. $2.3 million per year. Our recently presented city salaries budget went up by 3% per year. If our road maintenance costs went up by as much as we increase city salary (alone), we would miss our 5 year expense projection by $711,012. Im not arguing city employees deserve a raise. I am arguing that we should account for the actual costs to maintain roads to increase as well.
Money spent in one area often leaves nothing to spend in other areas, or less than ideal. Despite hearing our average road condition is a PCI of 72 (Good condition), I don’t think many people think city roads are “good” right now. The road I frequent most often recently is Prospect, listed as a PCI of 37. Im assuming that’s “Horrible”. I spend a lot of time on Stow as well, listed as roughly 40. Rating? Probably “Lousy”.
To elevate our roads to a PCI of 76 (or “Very Good”), we need to borrow $5 million. It has been mentioned by some council members that this is a capital expenditure, like building a road. I would argue this is a maintenance expenditure. We already built the roads. We are simply failing to maintain them. When you buy a house it is a capital purchase. If you paint it because weather has worn the siding, that is a maintenance issue. Do not fund road maintenance with bonds.
It is suggested that we can pay for this bond with a new gas tax that could bring in $500,000 a year. Taxes change and often with every election. To count on that to pay for a bond over 15 years is not reasonable.
Do our roads need more money? Yes. We should review our current balance carry forward and fund as much as we can out of our money. Our interest revenues on a large cash balance is insignificant. Lets get something significant for it. Roads. Finance as little of this as possible and count on the added tax revenue for a couple years, tops. If it lasts longer, great.
We need a collective city council interested in prudent spending. I want to be the Ward 2 representative on that council.