What if we measured the return on investment of local tax dollars in development projects?

Strong Towns has a great set of presentation videos about a very relevant subject for Sioux Center:

It has been suggested here by a local government official that cities need to spend money to make money. Will it work? “Don’t know” was the answer, which is true. Public officials at the local level rarely, if ever, even bother to measure whether or not something is working before they proceed confidently to the next big thing.

This mentality has infected local governments across the country, where gambling with other people’s money is seen as good stewardship, particularly if it is being done in service of the “right thing to do”. This often pits different factions of society into arguments over what the “right thing to do is” — is it another highway lane or perhaps a streetcar line or maybe a subsidy to a new business or an emissions reduction program — without any objective understanding of what is actually working or what the trajectory of the public balance sheet actually is.

How do we know if tax-funded projects are really proving profitable? The video above – REAL Return on Investment – “explains the difference, as measured by a local unit of government, between investing in economic activity and investing in a project that pays an actual return for the taxpayer.”

Then see how we can calculate the actual return on public projects:

The final video talks about how to look beyond cash flow to consider the long term costs as well:

“The higher the return on the public’s investments a community has and the greater its financial solvency, the more capacity it has to take on other endeavors.”

No comments yet.

Leave a Reply