Return on Investment and Government

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Are you familiar with the Term: Return on your Investment? Commonly known as ROI.

Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.

You might see this as interest earned over a period of time when talking to a bank manager or your investment broker when it comes to the bond market. If you are in business or manufacturing it is used as a means of helping management decide complex financial issues from as small as the purchase new equipment to the purchase of companies. Sometimes, but not often, it might be used in governmental issues.

The methods used in government is generally beyond the capabilities of most elected officials. Don’t believe me, just ask them the next time you see them.

A councilman once asked for one when it came to JEA’s and the city of Jackson’s distribution of funds used in regards to the Northwest annexation of land over a 10 year period. I was assuming that it would be in two parts. Part one would show JEA’s (ROI) cost to benefit plan over the next ten year period with total outlay estimates by each year with maintenance costs included and the City of Jackson’s ROI separate.

Those costs will include all costs related to this project, including planning, building, maintenance of all assets, salaries, pensions, health care, inflation, etc. by year for the next 10 years. Any proposed water shed and drainage programs, recreational facilities, bike trails, walking paths, etc. should also be included in those costs unless there is no plan to provide these. If that is the case, there should be some sort of impact study that would show that the cost that the additional 3000 new citizens to city will have on the present facilities if used.

For those that understand what he was asking for, you know that any expansion in business requires this piece of information, especially in a tight cash business market. What it should tell you in the end is whether or not you plan to lose money over a certain period of time or you intend to make money over a certain period of time and what percent to investment that is going to be. In government this means if we lose money, they increase taxes, if they make money, we may be able to decrease taxes overall. Simple as that.

Guess what, he never saw it, because in politics and government it doesn’t matter.

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