A Nice Example About How Budget Projections Are A Farce

In the light of the CBO's projections on health care reform I thought it would be good to share a local example of just how badly budgeting can go wrong.

Last year in the city I live there was a fierce debate on whether or not the city should start its own ambulance service. The case for was primarily profit-driven; the city would recognize an additional $3 million in revenue every year from the service. This money could then be used to offset property taxes, which are very high, even for Wisconsin.

There were serious concerns with the proposal: the City did not have the personnel, so those people would have to be hired and trained, and it did not have the vehicles or equipment, so all that would need to be purchased. The initial startup costs would place a significant burden on the city's taxpayers. It was a risk, but the trend at the time was a steady demand for health service and emergency transportation, so the outlay could be recouped within the first year, according to projections.

Ultimately the proposal died in council. In the year since, demand for emergency transportation and health service on the whole has fallen sharply, such that the existing ambulance service has had to lay off workers to cut its losses. The hospitals in the area are already working near minimum staffing and have just approved further cuts. The immediate future for health care in this area as a whole is depressed, and the city almost bought into it.

Had the ambulance proposal passed we, as taxpayers, would be taking a bath right now, footing the bill for an investment gone terribly wrong.

Fundamentally I oppose the premise that government should compete with private enterprise for the purpose of supplementing tax revenue. Even if the ambulance service could have been profitable, its unlikely our taxes would really have been significantly cut - government can always find more ways to spend our money.