Gas prices cause problems for City of Madison

Friday, August 08, 2008

From an article by Kristin Czubkowski in The Capital Times:

Rising gas prices will mean tough budget choices for Madison soon.

Madison Comptroller Dean Brasser said many city agencies like Madison Metro and city fleet services are already over budget this year because of fuel prices. This means that sometime before the end of the year, they will have to go back in front of the City Council to either request more money or to shift funds within the budget to cover for high fuel prices.

The city has developed the deficit even with the benefit of paying lower prices than individuals do at the pump.

On average, Brasser said city employees were spending $3.78 per gallon on gasoline in May compared to $2.47 per gallon in May 2007. Gasoline is usually cheaper for the city to buy than the average Madison driver because it uses a competitive bidding process and buys gasoline in bulk.

"We are retail customers like anyone else, except we buy in large quantities, and we have underground storage tanks ourselves in a number of locations around town. So in a way we're buying truckloads like a gas station would, but the purchase relationship is very different," he said.

The gas price squeeze will extend into next year, too. With fuel prices not predicted to drop anytime soon, Brasser projected that fuel costs would raise the city budget by $1.5 million if budget cuts were not made. That's about two-thirds of a percent of Madison's budget for 2008, which was $224.5 million.

For 2009, Brasser said agencies will likely have to make an "educated guess" on fuel prices for the next year.

"No one has a crystal ball and is able to forecast particularly in this kind of a market," he said.