How Municipalities Can Use New Budgets To Replace Old Trucks

Ted Grant

You want to automate your collection fleet, but where do you find the money for new equipment? Even though automation eventually will save money, most municipalities are hard-pressed to find the revenue to provide the services that taxpayers want and need.

Taxpayers may be demanding more services from their elected officials, but they are often reluctant to pay more taxes to fund them. On top of that, city and counties now must pay for increasing numbers of federal and state mandates, further depleting available funds.

A lease/purchase is one option to secure the equipment necessary to pick up the garbage. In fact, these plans currently are being used by municipalities to acquire more than $12 billion worth of equipment annually.

Lease/purchase plans have the cash flow benefits of a lease, but work like an installment purchase with payments being applied toward potential ownership. It requires no down payment or security deposit and only the periodic payments need to be included in the annual budget. These plans eliminate the initial cash outlay and, in most cases, general obligation bonds are not required. They also offer lower tax-exempt interest rates.

Lease/purchase plans can be established for an individual piece of equipment or a credit line can be created to add equipment throughout the year. As a result, capital equipment budgets can be held flat or even reduced, helping governments hold the line on tax increases while providing more and better service.