With gas prices rising as much as $1 per gallon since September, state and local governments, which provide an array of fuel-dependent services, are feeling the pinch.
There are 1.2 million passenger vehicles in use by all levels of government, plus 1.6 million trucks and 412,000 police cars, according to the Bureau of Transportation Statistics. The nation generates enough trash to fill 63,000 garbage trucks every day, and 480,000 school buses consume 822 million gallons of fuel every year. And all these vehicles take their toll on the country’s roads: The U.S. uses some 40 million tons of crude-oil-derived asphalt every year. State and local governments bear the brunt of these expenses.
“High fuel prices are a drain on city finances,” says Gregory Munchak of the National League of Cities. “A lot of this can be dealt with by budgeting … Other alternatives [include] service fees, fuel surcharges, tapping into ‘rainy day funds’ or in some cases cutting or deferring certain nonessential services.”
Some state and local governments are already moving to cope with rising fuel prices, which are now at a 30-month high. In Lincoln County, Miss., the county administrator told the local paper that money will likely be shifted from the road-paving fund to its police patrols in order to keep the fuel budget in line. The city of Dalton, Ga., is adding 1,500 hours of police foot patrols this summer. In Oak Ridge, Mo., school field trips and other extracurricular activities have been canceled as costs for fuel more than doubled over last year. Tippecanoe County, Ind. made a similar move this year. The school bus contractor there openly talks about going out of business if fuel costs remain high.
Hybrid buses may be another option for cutting down fuel costs. The school district in Napa, Calif., for example, found that the hybrid tested there doubled the fuel efficiency of traditional buses, saving upwards of $5,000 per year in fuel costs. But for now, upfront costs for such vehicles are prohibitively expensive for many municipalities. One new hybrid transit bus runs well over $500,000 – hundreds of thousands more than a standard bus -- and a hybrid school bus between $150,000 and $200,000.
Gwinnett County, Ga.: A Case Study
The problem is particularly acute in the ring of suburbs around major cities developed during the era of cheap oil and tract housing. The very things that drew people to the suburban lifestyle: safe streets, good schools and clean communities, are the very things that high oil prices can put in jeopardy.
Take Gwinnett County, Ga. Officials from this prototypical suburban community northeast of Atlanta say they look at direct cuts as a last resort in dealing with skyrocketing fuel prices. Last year the county joined a fuel-buying co-op with several other jurisdictions in the area to get more favorable fuel prices.
But consider the effects of that $1-per-gallon cost increase on some specific governmental services in Gwinnett County (calculations assume that the $1 increase holds over the course of an entire year):
POLICE
Total Police Department Budget: $85.5 million
Added Expenses from $1 per Gallon Price Hike: $2 million
The increased cost is equal to 50 field officers’ salaries in a county where there are 800 field officers for a jurisdiction of 800,000 residents.
SCHOOLS
Total Education Transportation Budget: $76 million
Added Expenses from $1 per Gallon Price Hike: $4 million
The county school system operates a fleet of more than 1,800 school buses for 120,000 students, using a major portion of the 4 million gallons of diesel fuel the county bought last year. In response to record gas prices in 2008, the department began a “school bus recycling” program, retrofitting older school buses instead of buying new ones in an effort to rein in costs.
SANITATION
Total Sanitation Department Budget: $43.2 million
Added Expenses from $1 per Gallon Price Hike: $2.2 million
Last year, the county implemented a new program for collecting trash from the 200,000 homes in Gwinnett County -- largely intended to streamline operations and make truck routes more efficient, thus reducing fuel usage.
STREET MAINTAINENCE
Total Transportation Maintenance Budget: $14.2 million
Added Expenses from $1 per Gallon Price Hike: $1 million
Gwinnett County is responsible for maintaining its 2,750 miles of highway, the bulk of which are paved with asphalt, which has gone from $376 per ton in September to $566 per ton currently (asphalt is made from crude oil).
For the moment, Gwinnett County remains within its fuel budget for 2011, thanks largely to its membership in the fuel-buying co-op, which purchased 21 million gallons of fuel this year, at a price that re-adjusts every week (currently, it’s $3.06 for unleaded and $3.32 for diesel). The county recently set aside a $250,000 rainy day fund for additional expenditures. According to Lindsey, other moves on the table include reducing driving miles where possible, further efforts to streamline operations, and implementing no-idling policies.
If crude oil and fuel prices continue their climb, the public will have to pay, either in the form of higher taxes, or decreased service levels for government services.
Related Links:
Impact of $100 Oil: Identifying the Winners and Losers (Seeking Alpha)
As Oil Prices Rise, Threats to the Economy Go Up, Too (NPR)
