It's Only 2 Cents

Long ago friend Dorothy Greacen was not a bit tolerant of the words, “It’s only.” One did not engage in conversations about government taxes or mandates that seemed trifling when there were pennies or fractions of a percent involved. She always did the math and pointed out how much was really at stake. “It’s only two cents” were fighting words in her presence.
I had reason to remember Dorothy as last Monday’s school board meeting saw us add $6,140. to the permitted expenditure for purchase of a new school bus. The original resolution to purchase the bus was made at the November meeting in the amount of $80,030.
In years passed the State of Ohio reimbursed nearly all the cost of buses. That is but a distant memory. The most recent bus reimbursement number is about $16,000. And the future of that amount is on shaky ground in light of today’s fiscal concerns at the state level.
The extra $6,000 was to cover the costs of a heavier duty engine and transmission, which are strongly advised owing to the hilly terrain our vehicles must travel. If we were on flatter ground we could get along with standard equipment. Our own past experience shows that investing in the heavier duty equipment now will save on maintenance costs over the expected ¼ million-mile lifetime of the bus.
But there was another amount hidden in the bid that went unmentioned until later in the discussion. Mr. Combs pointed out for board members that the base price of the bid was approximately $5,000 higher than a similar bus purchased the previous year. A tightening of emission standards had caused the increase.
If you do the math on this increase, it’s only about 2 cents per mile over the expected lifetime of the bus. Which sounds quite reasonable for a supposed reduction in pollution. And who can argue that we should not, as a school district or a nation, be in favor of reducing emissions at every opportunity?
The unfortunate factor here is that the increase must be paid for all at once. And up front. From a cash flow perspective, it is not 2 cents per mile spread over many years, but $5,000. Out of pocket today. Ouch.
There is another way to look at it that Dorothy might have pointed out. On any given day, our buses travel about 1,700 miles. At 2 cents per mile, that comes out to $34 per day. Or, over the school year of 180 days, $6,120.
So the trifling 2 cents per mile ends up costing the district over $6,000 per year assuming we will eventually absorb the added costs imposed on each new bus as we replace the fleet. And who is to pay? You, of course. But it’s only 2 cents.
Of course no one will argue against the expense. That would be irresponsible. We all must do the right thing. Yet it is the accumulation of right things that operate to drag the system down with added expenses over time.
Commonly referred to as unfunded mandates we all think we know what that means until we begin to look more closely and ask questions. This brief example is a mandate to comply with emissions regulations that ends up costing you, the taxpayer, money. Yet not an additional penny accompanies this mandate.
The money to cover the expense will have to come from current cash flows, which means something else will have to be cut to absorb the cost. This is but one simple example of which there are many. It’s only 2 cents.