Budget Box: The Impact of Inflation on the Association
Over the last several months, we all have felt the impact of inflation as we spend more at the grocery store and the gas pump. In addition to personally feeling the impact of inflation, many businesses are having difficulty finding the raw materials and labor necessary to manufacture their products. This reduction in supply, coupled with increased consumer demand, can greatly impact the funding plan for communities trying to prepare for the future in a fiscally responsible manner.
As we worked through finalizing the 2022 Budget, The Landings Association was faced with ensuring all necessary projects and assets scheduled for replacement are completed next year, while reaching our three-year Assessment Plan commitment of 30% funded in the Capital Reserve Fund by the end of 2023. Increased costs in labor and materials required the Association to conduct an even deeper review of all assets, their useful lives, and current values. The bulleted items below outline some of the adjustments made to assets scheduled to be replaced in 2022 and 2023 to ensure we meet our last Assessment Plan (for Annual Dues) commitment to the community.
- In September 2021, the Public Works Department received a quote for concrete that was 20% higher than initial quotes received earlier in the year. The department thoroughly reviewed the remaining paths to be converted from asphalt to concrete in 2022. Three of the eight remaining asphalt paths are located outside our gates and were moved from 2022 to a 2024 conversion so as not to lock in these higher rates for paths not within the gates.
The Association has a full-time mechanic on staff who ensures all Association-owned vehicles and equipment are maintained and in good working order. As part of the deeper review, we were able to extend the useful lives of seven vehicles by one year each.
Road resurfacing is one of the largest costs for the Association each year. With the rising costs in asphalt resulting from crude oil prices, the Public Works Department successfully negotiated with our contractor to lock in a cost 15% lower than the original amount quoted for 2022.
As prices may continue to rise for the foreseeable future, your Association is committed to protecting our major infrastructure while remaining strong financial stewards for the future of the community.