NOTE: This article first appeared in the January 16, 2006, edition of

Dollar-Wise and Ton-Foolish

It was reported in the January 5, 2006, edition of the Smithtown Messenger, in an article entitled “Senator Flanagan Announces Grant For Huntington Town Hall Energy Project”, that New York State Senator John Flanagan (East Northport) has announced the securing of a grant of $14,482 “to help finance a boiler replacement project at Huntington Town Hall.” According to the article, the Town of Huntington is undertaking an “energy-efficiency project to replace two 40 year old boilers and the associated burner units” that will cost “nearly $725,000”. The article states that the expected annual savings that the town will realize as a result of the project is $21,406.

Either the figures in the article are misprints or I figure cost-benefit analysis differently than those in government, but the way I see this project, the money saved is not going to be worth the money spent. At a cost of $725,000 and annual savings of $21,406, it will take the Town of Huntington 33.869 years to recoup the total savings that the project is supposed to bring about.

First of all, the securing of this grant and the spending of this money take the notion of being penny-wise and pound-foolish to a whole new level. It is akin to a person's spending $72,500 on a new fuel-efficient car that will give him better gasoline mileage but will net him savings in gasoline expenditures of only $2,140.60 per year. Would any person make such a foolish purchase?

Second of all, big government has to be at work here somehow, and sure enough, as one reads further along in the article, he will see that the grant comes from “New York State's portion of the Petroleum Overcharge Restitution fund, [which consists of ] monies recovered in federal cases to compensate consumers for oil industry overcharges in the 1980[]s.” If the state is entitled to damages, why doesn't it use the money in a way that will help taxpayers? Instead of spending a fortune to save peanuts, why doesn't the state use this money to contribute towards paying down its massive debt?

And finally, even with the securing of this grant, this particular expenditure of such a large amount of money to save such a comparatively small amount of money is unusual for another reason. In most cases in which local governments receive grants for such projects, they often receive much greater portions of their total expenditures than is the case here. Local governments are usually able to fool taxpayers into believing that they are getting such great deals because the money, in the form of grants, is usually “free” in that it is not being footed by the local government itself (and the local taxpayers themselves). However, even in such cases, the free lunch is delusional because the money is being provided by a larger group of taxpayers on a higher level of government. And besides, even those local taxpayers are part of that bigger tax-paying unit. However, how does a government go about pulling the wool over its residents' eyes in this case? This grant is so relatively miniscule as compared to the entire cost of the project, most of which the local government will have to pay itself.

Some people in government must stay up at night to try to figure out creative ways of spending money. Although the money being unwisely spent in this case came not from the taxpayers but by way of damages awarded through litigation, the fact remains that the imprudent use of the money is costing the taxpayers in that the money could be used for something that is in the better interests of taxpayers than the purchase of something that will not enable the taxpayers to break even for nearly 34 years.

If it were up to me, I would keep paying the “extra” $21,406 a year and take my chances that a cheaper way of saving energy will be arrived at within the next 33 years. And I would also keep the gas guzzler.