By John Hill
First Bankers
In today’s tough economy, many fire departments are faced with a dilemma: they need a new apparatus, but their elected officials want to postpone the purchase.
Fire departments can no longer justify their fire truck purchase solely on operational arguments such as the truck is old, it’s no longer safe, or parts are no longer available. Instead, fire department leaders also must provide a financial argument to support the purchase.
There are three common financial reasons that municipal governing bodies give when delaying a purchase. However, there are ways to present a persuasive financial case to overcome the natural resistance to do nothing.
“Let’s just wait to buy,” is the most common reason given today. It can be presented differently — “it’s just not the right time, we don’t seem to have the money, etc.” — but the underlying thought is the same.
“Let’s just do nothing,” is one council members like because it seems like a free choice. Doing nothing doesn’t have an apparent price tag. Buying a fire truck costs hundreds of thousands of dollars.
When it’s measured like that, doing nothing seems like an easy and cheap choice — it may even be couched as fiscal responsibility.
But those elected officials are missing something. Doing nothing comes at a cost.
Savvy fire department leaders are learning how to calculate the cost of buying versus the cost of doing nothing or of waiting. Just as important, they are learning how to present those findings.
Delaying a decision does have costs. The key to making an effective financial case is to fairly and accurately present the cost of action versus that of inaction. It’s important to not stretch the truth because a loss of credibility will undermine the argument’s effectiveness.
The low-hanging fruit is the costs to repair and maintain an old fire truck to keep it in service. Use all available data to calculate this projected cost. Some of the factors to consider are repair histories, rates from outside repair services, cost of hard-to-find parts, and differences in fuel efficiency.
Finally, there is a cost associated with lost buying power. Fire trucks are made from highly inflationary materials like rubber, steel, copper and plastics.
Over the past few years, fire-truck inflation has run much higher than the overall economy’s stated inflation rate. And that trend is expected to continue.
If fire truck inflation is 4 percent or 5 percent per year, the typical fire truck will cost $20,000 to $25,000 more in each passing year. That means that that waiting one year to buy the same fire truck will cost the municipality an additional $20,000 more; wait three years and the figure jumps to $62,000 more than a purchase today.
To elected officials, it might seem an easy solution to force the harder decision and higher price to the next council in a few years. By adding a financial case to the operational case, your department can sway resistant councils to reconsider their decision to do nothing.