The Region manages a large volume of financial resources and considerable assets. In comparison with the business sector, one could see the Region as a relatively large corporation whose prosperity is subject to numerous internal relations and external factors.

Managing the Region’s financial resources and material assets appears to be a very complex task. At first sight, it looks very complicated – so many figures and accounting operations, so many objectives, projects, negotiations in progress, etc. The number of issues to handle is really great and each of them requires careful focusing and takes time, i.e., a great deal of work and patience.

The very substance of management is somewhat simpler. “I cannot not spend more than I make, and I have to keep a reserve for worse days.” In short, the same principles apply as in managing a family budget or the strategy of a well-managed company.

Precisely there, however, is the hitch. I realized it in 2006 during our decision-making about taking out a large loan for mending our roads.

If a corporation or an entrepreneur takes out a loan, they do so with a single purpose in mind, namely, to expand and improve their activities, in order to be able to offer a new product or service in the market. A corporation or an entrepreneur takes out a loan to purchase a new machine that generates returns. No company takes out a loan for things that do not pay for themselves, as it would be frivolous or make no sense at all.

A public administration institution, such as a region, needs a loan for repairing roads. However, the borrowed funds are put into something that does not earn any money, on the contrary, it costs more and more money over time. Simple economic principles obviously do not work here and common sense must be applied, instead, which says: Can we afford to take out such a loan? How long is it going to take us to pay it off? How much is it going to affect our other expenditures? We have to seek answers to such questions and then make a decision.

In short – the economic principles applicable to public administration differ from those used in the business sector. This is not to say, however, that public institutions can afford to be wasteful or irresponsible, and we in our Region prove not to be with every step we take or decision we make.

Miroslav Houška

Councillor responsible for management of assets and finances