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Weathering Budget Shortfalls

Posted by Jacob Wells on Jun 3, 2020
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Even as the country begins to reopen, plenty of uncertainty remains about how COVID-19 will impact state, county and municipal budgets. Lost tax revenue and the costs of responding to the crisis threaten to create significant deficits. 

Budget Shortfalls

And although essential services and infrastructure must be maintained, budget shortfalls may mean deferring purchase of the capital equipment needed to do so. That leaves sewer departments with a predicament: how to maintain essential wastewater services without the proper inspection equipment.

Fortunately, creative budgeting and financing can offer some short-term flexibility.

Leasing

Converting a planned purchase to a lease is one popular strategy. By structuring the equipment cost as a series of monthly lease payments, rather than a lump sum cash purchase, you may be able to acquire new inspection equipment with operating budget rather than capital budget. Leases vary from vendor to vendor, but commonly available terms include

  • Delay of the first payment for one full budget year ("payment in arrears")
  • Lower payments for the first year or two
  • Conversion of short-term financing (3-5 years) to longer-term financing (6-7 years)

When the lease term ends, you typically have the option to buy the used equipment outright—which may make sense, especially if you’ve maintained it well.

Rental

If you expect budget constraints to be short lived, or if your scope of near-term work is small, you may also consider equipment rental. Favorable terms can be negotiated for extended rental periods, and many suppliers offer rent-to-own incentives where rental payments can be applied toward eventual purchase of the equipment.

Outsourcing

Rather than performing inspection work in-house, you may decide to contract out inspection services until capital budgets are restored. This option is particularly suitable for departments where inspection crews can be redeployed to other tasks like sewer jetting, catch basin cleaning or street sweeping. By procuring inspection services rather than inspection equipment, you pay only for what you need near-term (and you avoid less predictable costs like downtime and maintenance) until budgets are restored.

Regardless of which option you pursue, get your purchasing staff involved early. They will let you know which options your specific budget policies allow, and they may be able to offer additional guidance and resources to help meet your needs. Also speak with your preferred vendor; they can offer more specifics about available lease and rental programs.

Most importantly, be a strong advocate for the essential services your department provides. It is easy for administrators to look at sewer inspection equipment as another budget line item, but public health and sanitation can’t be ignored. Moreover, the costs of deferring critical maintenance—measured in backups, overflows and emergency callouts—will soon outstrip any short-term savings.

Envirosight's sewer inspection trucks are an example of equipment that is typically procured using capital budget, but which municipalities may be able to lease using operating budget. Take a look at our inspection vehicle options:Learn More

About Envirosight

Envirosight provides video pipeline inspection solutions to municipalities, contractors, departments of transportation, and civil/environmental engineers. Envirosight is committed to ongoing innovation, delivering products that enhance user productivity and inspection detail. Envirosight serves customers through a trained network of regional sales partners who deliver localized support and expertise with rapid turnaround. 


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