Government's Systematic Indifference to Capital Maintenance

There is one thing you can almost always assume with government managed land and infrastructure -- facilities will likely have a large deferred maintenance backlog.  Two examples:

These problems are ubiquitous.  You can point to any government parks agency, and most any transit agency, and you will find the same problems.

Why?  Well, I have not studied the problem in any academic sense, but I am face-to-face with the problem every day in parks.

Let's start with the reason that is not true -- that somehow budgets can't support capital maintenance.  I know for a fact that this is not true in parks.  We operate over 100 public parks and are totally up to date with all maintenance and have no deferred maintenance backlog.  This is despite the fact that we work with only the fees paid by visitors at the gate.  Government agencies typically supplement fees at the gate with an equal amount of tax money and still don't keep up with maintenance.  So the issue may be costs or priorities, but the money is there to keep parks fixed up.  (I am willing to believe the same is not true of large transit projects, but these projects are known in advance not to be able to cover their lifecycle costs with revenues, and simply hide that fact from taxpayers until it is too late.  Thus the sales tax increase that is being requested in Phoenix to keep our new light rail running).

I think the cause lies in a couple areas related to government incentives

  1. Legislatures never want to appropriate for capital maintenance.  If the legislature somehow has, say, $100 million money it can spend on infrastructure, their incentives are to use it to build new things rather than to keep the old things in repair (e.g. to extend a rail line rather than to keep the old one fixed).
  2. If you want to understand a government agency's behavior, the best rule of thumb is to assume that they are working to maximize the headcount and the payroll budget of their agency.  I know that sounds cynical, but if you do not understand an agency's position or priorities, try applying this test:  What would the agency be doing or supporting if it were trying to maximize its payroll.  You will find this explains a lot

To understand #2, you have to understand that the pay and benefits -- and perhaps most important of all -- the prestige of an agency's leaders is set by its headcount and budgets.  Also, there are many lobbying forces that are always trying to pressure an agency, but no group is more ever-present, more ubiquitous, and more vocal than its own staff.   Also, since cutting staff is politically always the hardest thing for legislators to do, shifting more of the agency's budget to staff costs helps protect the agency against legislative budget cuts.  Non-headcount expenses are raw meat for budget cutters, and the first thing to get swept.  By the way, this is not unique to public agencies -- the same occurs in corporations.   But corporations, unlike government agencies, face the discipline of markets that places a check on this tendency.

This means that agencies are loath to pay for the outside resources (contractors and materials) that are needed for capital maintenance projects out of their regular budgets.  When given the choice of repairing a bathroom at the cost of keeping a staff person, agencies will always want to choose in favor of keeping the staff.  They assume capital maintenance can always be done later via special appropriation, but of course we saw earlier that legislators are equally unlikely to prioritize capital maintenance vs. other alternatives.

The other related problem faced is that this focus on internal staff tends to drive up pay and benefits of the agency workers.  This drives up the cost of fundamental day to day tasks (like cleaning bathrooms and mowing) and again helps to starve out longer-horizon maintenance functions.

As proof, you only have to look at the mix of agency budgets.  Many parks agencies (e.g. New Jersey state parks, which I have studied in depth) have as much as 85% of their budget go to internal staff.  My company, which does essentially the same thing (run parks) has about 32% of our budget go to staff.  State parks agencies have 50% or more of their staff in headquarters or regional offices.  In my company, 99% of the staff is in the parks.

I don't think that these incentives problems can be overcome -- they are simply too fundamental to how government works.  Which is why I spend my working hours trying to convince states to privatize the operation of their recreation facilities.

  • Jim Collins

    You don't put politician's names on repair projects.

  • Matthew Goldey

    Actually, in Chicago, you do. They suddenly starting repairing a playground by me right before the run-off elections with a banner of Rahm Emmanuel's name posted prominently, and every summer park event last year had his name displayed.

  • slocum

    They prioritize staff and yet...strangely...don't seem to have the staff available for basic functions. We visited Arches National Park recently and got stuck in a long line waiting to enter -- because they had just one of the entry lanes open. Some of the people farther back got so discouraged they were turning around and leaving. When we finally got to the window, I let the guy have it a bit -- pointing out that was beyond ridiculous to have just a single gate running. Angry people were turning around and leaving and everybody who did wait it out was starting out with a really lousy experience. His explanation? "Well, you know, people have to take lunch breaks". I was speechless. Hey, customer-service geniuses -- get somebody to *fill in* during lunch hour. And, worse, despite the long line, the guy was still taking plenty of time to hand out maps, give advice, etc, etc. Here's *another* genius idea - when it's busy send people to the visitor center for that kind of hand-holding. (Sheesh -- I'm re-experiencing the 'DMZ rage' just remembering).

  • Matthew Slyfield

    "If you want to understand a government agency's behavior, the best rule
    of thumb is to assume that they are working to maximize the headcount
    and the payroll budget of their agency."

    Why this is so is easy to explain, at least at the federal level.

    For the executive branch of the federal government, management salaries are determined by number of employees managed and the manager's budget. This applies to all levels of executive branch management from first line supervisors all the way up to the cabinet department heads.

    Maximizing head count and budget is pure self interest on the part of executive branch managers.

  • Matthew Slyfield

    "When we finally got to the window, I let the guy have it a bit"

    Why? It's not like the guy manning the window is in any position to do anything about it.

    This is no better than former Vante CFO Adam Smith ranting at a 16yr old drive through window cashier at a Chick-fil-A over the corporate stance on gay rights.

    If you feel the need to rant right then and there, at least ask to speak to his manager.

  • Not Sure

    "They prioritize staff and yet...strangely...don't seem to have the staff available for basic functions."

    If they have staff available for basic functions, how can they expect to get the increased funding they'll surely want next year? The goal is to make the public miserable enough to be willing to tolerate tax increases. This is why, whenever there's a budget stalemate, the first services to be shut down due to the "crisis" are the ones the public most cares about.

  • Shane

    Shockingly this is how poor people run their finances too.

  • Earl Wertheimer

    Sorry, the two are not the same. The staff working the booths have some control over their jobs and can certainly arrange for a backup or staggered lunch hours. What if one worker is sick and the other is having lunch? Do they close the gates until lunch is over? The Chick-fil-A twit was complaining about their political philosophy, something the cashier had absolutely no control over.
    The job of the person in the booth is to accept payment as efficiently as possible.

  • buanadha

    Chicago has put names on construction sites/repair projects forever. Friends of mine back in college had a bar made out of Harold Washington signs for some construction/repair project.

  • Matthew Slyfield

    "The staff working the booths have some control over their jobs and can certainly arrange for a backup or staggered lunch hours."

    Staggered lunch hours yes, which they obviously did or there would not have been anyone at the gate when you got there. However I rather doubt that they can on their own without going through a manager bring extra employees on shift to man the extra gates.

    "The job of the person in the booth is to accept payment as efficiently as possible."

    The job of the person in the both is what his manager's tell him his job is and/or what is in a forma job description. If that includes handing out brochures, then handing out brochures is part of his job.

  • DerKase

    Incentive #1 is an ancient problem. During the Civil War, the northern states recruited regiments that were then federalized by the US gov't. The US gov't paid each state a set amount to arm and equip each regiment, plus an amount each month to maintain them.
    A regiment starts out as 1,000 men in new uniforms. Very soon, the numbers start falling. Men get sick and are sent to hospitals. Most don't return to the ranks. Battles happen and men get killed and wounded. After about two years, 1,000 men dwindled to 300 still serving in the ranks.
    The regiment commanders said, "send us more recruits so we can refill the ranks." The states said, "no, we'll raise new regiments and let the old ones die on the vine."
    Why? Because the US gov't gave states more money for more regiments. If you were the governor of Illinois, it would be foolish to pour recruits into existing regiments when you could get extra money by starting up new regiments.

  • bigmaq1980

    WMATA is one of the first examples I would have picked too!

  • peter

    Same in every part of government . Long time ago I complained to the local council that trees were overhanging a section of road so buses were knocking branches off. Their response was to send 4 people. One to assess the job, one to cost it, one works manager and a budget guy. They spent the next hour in conference an then came to me to explain how there was no money left in the budget to do it this year. They then each got back into their individual council owned cars to drive back to the same office.

  • Noumenon72

    Maximizing headcount? :)