A.J. Smith

As many issues seem to go round and round on the issues, with the same position and no action, I suppose that is the basics of a blog site. As Mr. Laubach reads the posts, or at made a reference to economics, I'd like to offer a few comments.

To TonyB- thanks, I know my typing is fast, and occasionally done on a netbook many times with a small space between keys, I hope all will excuse my clumsy hands as they hit a key smaller than a dime.

Mr. Laubach's point appears to be ROI is a measure associated with optimizing a return on expenditiure. While ROI does focus upon a return on capital out;, indeed, like current ratio, COPD, and virtually all financial ratios, with the exception of EPS, its function is both a profit measure and an operational or cost performance measure. The point he was making of course, was public sector business is not in the business to make MONEY ($$$), but to most efficiently use capital and maximize the return on capital, otherwise Cost Of Capital Deployed, and how effectively it is used in a ratio.

First Point: I can go directly to the balance sheet of the city of Middletown Mr. Laugbach, I and I can tell you the water department is RUN as a PROFIT CENTER, not a cost center, if a rate of return the envy of a private corporation> 10% after tax. That is not running a city as a service nor efficiently, but setting up citizens to be exploited by profit.

Now, to the golf course, Hook Field, the other assets the city maintains. No city should be in the business of running airports, golf courses, and  building maintenance. That is NOT a core competency and what their function to be. Its quite simple: they pick up trash, provide water directly or indirectly, and protect citizens, through fire and police professionals. Its that simple isn''t it?

Bill, so we need some Six Sigma Black Belts to re-engineer the city? No problem, I'll call a partner I know at PWC, and he'll donate about 4 weeks of time pro bono to do a gap analysis on where the cuts can be made. They are numerous. And, i won't cost the city a penny. What a deal right?

TonyB, we can't outsource, we need that management? If so, why do we have Runke picking up trash, that seems to work fine? The savings on pension alone adequately compensates for using outside contractors. In fact, the federal DoD uses contractors to the tune of nearly 90% to staff everything from secretaries, to PHD's in network engineering, to some of the top logistic/ supply chain experts in the world. Why would that not work in Middletown? Hardly more complex than a global logistics distribution for the Air Force is it.   

Middletown suffers scope creep in its public business, the same mess we are involved in Lybia. What started out to take a day or two in Lybiahad cost $.5 Bb, growing daily, and a key driver with gas hitting $3.80/ gal with no end game in sight. The same with the city. It doesn't know what its function to be. It is not running golf courses, not running airports, not running water supply, although  it is the cash cow of the city, and run for a profit TonyB and Mr. Lambaugh, nor being a property management entity. No, Middletown's 'problems are it has been on scope creep too long, and doesn't know what its real function to be, which is the root of its problems. 

Finally, I don't give a damn if the city has to dip into the once sacred rainy day reserve once set at 25%, now down to 15% to pay for salaries, to bring it down to 5%. Put the dedicated funds and $ mm into maintaining the roads and infrastructure, the most basic of fundamental responsibilities of this city. I don't care of you sell Weatherwax, sell the airport, wipe out 75% of the workers, but maintain the streets, as you are ruining our investment in our properties by investing in areas outside the core of any city's dudty or business while neglecting the fundamental rights citizens have, and that is to have adequate roads maintained with taxpayer funds.

Even Adam Smith and The Wealth of Nations Mr. Lambaugh, does have reference to running a city. Its quite simple. Maximize the services provides by the least amount of money. The water department does not meet that standard, and the examples of outsourcing it readily abundant in the city already---Rumke, Superior Asphalt, attorneys acting as ED's, to name a few of many. 

TonyB- if we vote THEM out, who is voted in? The depth of candidates has been a void for many, many years..     

Vet - I now believe we are getting to the heart of the matter. What do you want from government. More important still, based on these arguments, do you even want a government! I said it in council on Tuesday; if you think government is the problem, perhaps it's not the government you believe it is.

acclaro - I think you actually make my point about garbage.  The pick-up of garbage was a government function  for many years because there was no value to garbage; that's why they called it garbage!!! When refuse became something that had value, it stopped being "garbage" and became "waste". Notice that the company is not called "Garbage Management" , it's called "Waste Management". Your example about  the city and Liberty Township; they are both government entities. One is not a private, for-profit company. The sharing of responsibilities between local government entities is a good way to efficiently use taxpayer resources. My contention is, and will remain, that if a private company can provide the service for less and make a profit, a government should (assuption) be able to provide that service for less BECAUSE there is no profit motive involved. Your example above is private businesses contracting other private businesses to provide services or products is because it makes that business PROFITABLE! That's the purpose of business. The "profit" of government services are that they can are enjoyed by all. That includes the private sector.

TonyB...."The pick-up of garbage was a government function for many years because there was no value to garbage".......

The city got rid of the task of garbage pick-up by city workers because of the cost. The city was paying for the garbage trucks, gas and the maintenance of an aging fleet, the driver's salary/bennies, the salaries/bennies of the guys that rode on both sides of the truck actually carrying the cans to the truck and back to the curb. (They went to one guy on the back of the truck doing both sides of the road for cost savings, then the driver only ala Rumpke of today before contracting it out to Rumpke and disposing of the trucks altogether. The city also had the cost to maintain the city dump located where LaRosas, White Castle, Odd Lots and the former Damons/ Schiavone's "Junction" restaurant stands today.

"My contention is, and will remain, that if a private company can provide the service for less and make a profit, a government should (assuption) be able to provide that service for less BECAUSE there is no profit motive involved".

IMO, it is not necessarily so that the government can do it cheaper. The cost to provide that service may be higher because of salaries, layers of beauracracy, in-efficiency of operation and other issues related to cheaper operation. Private industry wants to do it faster, cheaper and more efficient because if they don't, it cuts into the profit margin. Public entities don't operate with the profit motive and their urgency to get it done isn't as great. JMO

TonyB, I have attempted to get this thread focused upon hw Middletown could save money, and the point Josh Laubach made regarding his view a city focuses upon cost containment and efficient operations in Middletown, when I indicated in water services, a few others, it is an actual profit center, it makes money (although it retains its non profit tax exempt status.

Consider the following:

Four cities in close proximity.

One of 50,000 people; one of 20,000; and two of 12,000 each.

One needs 5 operating ambulances and two spares; one needs 2 operating ambulances and one spare; and two need 1 operating ambulance and one spare each

That is a total of 9 operating ambulances and 5 spares.

If they could agree on a “standard” ambulance perhaps they could get by with 9 operating ambulances and only 3 spares--a savings of 2 spares.

By re-supplying the ambulances from a common stock of supplies, they likely could all benefit from a lower cost of consumables (bandages, IVs, etc.)

Could such an arrangement work for, say the cities of Middletown, Monroe, Franklin, and Trenton??? I don’t know, and perhaps ambulances is a poor example, but you get my drift, and if the same company was also supplying police cars, snow plows and other vehicles and providing routine maintenance…

Vet - I disagree that cities got rid of garbage collection because of cost. They got rid of it when it became profitable for private companies to provide the service. If there were no profit, cities would still be picking up trash regardless of the costs. If I'm not mistaken, private industry is always looking for ways to turn what was refuse in their operations into an opportunity to make a product and a profit. I think I read that early in the history of oil, gasoline was considered a "garbage" until someone found a use for it; then it became a profitable commodity.

OK, I'll name two:New York City collects trash with city workers, so does Cincinnati. Cincinnati is looking to outsource trash pick up as a cost saver Tony.

TonyB...."Vet - I disagree that cities got rid of garbage collection because of cost" Tony, it was easier and cheaper for the city of Middletown to get rid of their trucks, manpower, employee bennies, insurance premiums paid for vehicles/people, and give it to Rumpke.


acclaro post at 7:28PM...

"Cincinnati is looking to outsource trash pick-up for cost reasons."

Looks like acclaro found some info. that supports my statement above about city cost savings.

Tony, despite all the flaws with the private sector, they still do a better job, faster and cheaper in almost any area of discussion than any level of government. Surely, you are aware of the many stories concerning how slowly and inefficiently and how expensive projects can be when the government has their hands in anything. I see it everyday while working around both government employees and the military. Neither offers a hint of efficiency in their thinking and in their execution of daily activities. As a taxpayer, you would be upset at the money wasted, the layers of paper shufflers on base, the multilayers of high salary people who's jobs are so concise, they actually only work 4 out of 8 hours as their day is normally not filled with activity for a full working day. You watch government people work after coming from private industry for many years and you just shake your head in disbelief at the expectation difference in the two worlds.

TonyB, I apologize, but I continue to miss your point. I tried to keep the post on the need for Middletown to focus on cuttingcosts, running at the highest level of effectivenss, but we continue to debate profit motives vs service motives. I don't see your point. Lets use another example. Southwest Airline can fly you anywhere in the United States safely and cheaply, than you can pull out the car you own, fill it up, and drive to pt A to B (assuming you are traveling at least a 2-3 hr flight. Southwest Airlines makes a profit by running highly efficent, by operating only Boeing 737's, so their mechanics can keep parts low and their mechanics know one airliner---the 737. They also fly pt to pt, not through hubs, and avoid the high cost tariff air ports. So, are you saying its wrong or studpid to fly Southwest, because they also are in the business to make money?

acclaro - my friend, I believe we are getting somewhere here. If there are businesses that can do exactly what city employees do, why do we have city employees? It's the mandate thing here, IMO. Once again, why have a government if we can just have a corporation do it?

acclaro - I agree that AJ will not be recalled. Many of you on here have me convinced that MMF (whichever one that is) will sweep their  candidates into office in the fall. Don't see a coherent plan or a  coordinated effort that will change that; IMO.