This fuel cost argument isn’t exactly panning out. The WSJ did a story that started to explain that the WORST BUDGET EVER IN THE HISTORY OF THE UNIVERSE FOR THE FIFTH YEAR IN A ROW!!!!! isn’t quite so bad. We’re in the middle of our first round of questions for the budget and here’s a few things that I find fascinating from that night.
The Mayor, in his budget statement says:
Fuel costs are up over 40% from $5.9M to $8.4M.
However, the Metro Transit budget says that we are projected to spend $4,650,600 on diesel in 2008 and yet only are budgeting $4,529,616. Which is LESS than last year. Their gas is estimated to cost $37,300 in 2008 and we budgeted $42,000 for 2009.
The rest of the fuel costs are in Fleet and they are as follows. We are projected to spend $1,800,000 for gas this year. And next year we are budgeting $1,780,301. So again, there is no 40% increase, but in fact, a decrease. For diesel, we are projected to spend $2,530,000 and are budgeting a half million less for next year. The budget number is $2,065,343.
So, there is no 40% increase. If fact, there is a decrease. We’re spending $9M this year, and we’ll only spend $8.4 next year.
In relation to this, here’s some good news they sent us yesterday.
Fleet fuel contract. On Wednesday, October 8 the City accepted a contract to lock in fuel prices for Fleet Services for 2009. The lowest bid came in $602,763 less than what is included in the 2009 executive budget for diesel and gasoline at Fleet Services. This adjustment reduces the necessary increase for Fleet fuel expenditures in 2009 from $1,200,000 to $597,237. Of course this amount may change during 2009 due to unanticipated fuel consumption (e.g. snow).
Recognizing our continuing challenges with the budget, after consulting with the Mayor, Council Leadership will propose a Board of Estimates amendment that will accomplish the following:
* Reduce fund balance applied from $3.3 million to $3.0 million. This will help us work toward our stated policy goal of maintaining a fund balance equal to 15% of our total operating budget.
* Increase the contribution to contingent reserve from $1.0 million to $1.2 million. This brings us into conformance with our stated policy of appropriating 0.5% of budgeted expenditures to the contingent reserve. Further, there is an existing relationship between fuel costs and the contingent reserve. Last year the contingent reserve provided Fleet Services with an increase of $101,000 for fuel. In 2008, a mid-year adjustment provided an additional $530,710 for Fleet fuel. Given the likelihood of additional fuel costs in 2008 we may want to project additional expenditures up to a $1 million for this year. This proposal restores part of those funds that were derived from our limited contingent reserve.
* Given the downturn in the economy and the increasing service demands, an increase to the total allocation to OCS by applying the remaining $72,763 in fuel cost savings. This amount would be added to the lump sum that is proposed to being allocated to the CSC following adoption of the budget. The following action, if approved by the Common Council, would meet our fund balance policy goal, protect the contingent reserve and working towards fulfilling Council members’ concerns regarding OCS’ ability to preserve their commitment to provide critical services to our community.
Stay tuned as I continue to figure out what this all means. And if we really need to increase those bus fares . . . .
