Gas prices fuel city deficit
Residents aren’t the only ones whose wallets are taking a hit as fuel prices continue to rise. The city of Columbus is also feeling the effects of price increases.
City Auditor Hugh Dorian, who presented the 2009 Tax Budget to council at their June 16 meeting, said that under current conditions, the city can expect a $75 million gap in the budget for 2009.
One of the biggest culprits in the city’s funding problems, according to Dorian, is rising fuel prices.
“It has been a challenging year,” said Joel Taylor, finance director for the city, referring to the effects of fuel costs on Columbus’ budget.
When the 2008 budget was created, fuel was at an average price of $2.50 per gallon. During the first five months of 2008, those costs have risen to an average of $3.16 per gallon for unleaded fuel and $3.63 for diesel.
“These costs were significantly above what had been budgeted,” said Taylor.
And the costs are still rising. Current prices for unleaded fuel are averaging $3.75 per gallon for the city, while diesel has risen to $4.28, according to Taylor.
The city does purchase fuel in bulk for a reduced price, but reduced prices are climbing, as well.
At the meeting, council also passed an ordinance approving the spending of $4.5 million towards bulk fuel purchases. An ordinance for the same amount was passed in February, with this second expenditure originally intended to last the remainder of the year. This is no longer the case.
According to Taylor, the city has already surpassed their budgeted fuel costs by $1.4 million, and that number is still going up.
“It’s difficult to put a price on it for the future, because we don’t know what will happen,” said Taylor.
Taylor estimated that fuel cost increases for 2008 could total an estimated $3 million.
“We’re already looking to increase next year’s fuel budget by at least $3 million,” he added, explaining that for each 30 cents the cost of fuel rises over the budgeted $2.50 per gallon, about $1 million in deficit is added to Columbus’ budget.
The city is taking steps towards fuel conservation where it can, said Taylor.
Columbus is already enforcing an “anti-idling” policy for city vehicles and has begun reducing its fleet, he added.
Several of the city’s larger vehicles have been equipped with special engine heaters, enabling them to have shorter warm-up times in cooler weather.
In July, Columbus will take delivery of an experimental refuse truck that uses compressed natural gas.
According to Taylor, the city is looking into the purchase of hybrid vehicles, although most of the hybrid vehicles currently available are not equipped for the heavy-duty performance needed by the city.
“Some of the heaviest uses of fuel are coming in areas where we don’t have a lot of options,” said Taylor, adding that there are no fuel efficient options for police cruisers or fire engines and refuse trucks.
Although fuel is one area adding to dwindling city funds, it is not the only factor.
Dorian also attributed next year’s budget, which he described as “ominous,” to overtime in the safety division and other areas.
Dorian noted that the city is required by law to operate under a balanced budget.
Although council has not yet discussed how they will balance the budget with such a large expected deficit, Dorian explained that cuts in those areas should be expected.
“The biggest challenge in my career is bringing this gap to a closure,” said Dorian.
He urged to council to consider the budget earlier in the year than is normal practice, saying “This can’t wait until November.”
“There really is a 2008 impact that we will have to consider sooner rather than later,” Dorian added.
“The year-end carryover is becoming a critical part, but there’s too much time left in the year to know what will carry over,” he said.
The 2009 Tax Budget was tabled for one week to allow a public hearing on the matter, although a time and date for that meeting had not been announced at press time.