Every 10-cent increase in the price of gasoline and diesel fuel costs Henderson more than $14,000 over the course of a year, and rising fuel costs are wreaking havoc on the budget process.
The municipal government buys its fuel from Rose Oil. Public Works Director James Morgan, who oversees the city garage, said he gets a delivery of gasoline every four or five weeks, and Rose Oil’s Sam Watkins sends him a bill for the market price at the time of delivery.
The city is exempt from the taxes on vehicle fuel, so Morgan said you can get a good idea of what the city pays for gasoline by subtracting 45 cents from the price you pay at the pump. (The city used to pay the full price for the fuel, then file for reimbursement of the taxes from the state, but now Rose Oil, which pays the taxes when it gets the gasoline, takes the responsibility and expense of filing for the reimbursement and charges Henderson the tax-free price.)
At budget time each year, “I try to get up with Sam Watkins,” Morgan said, “and we try to come up with an average price to last all year long.”
They try to err on the high side so that too much money is in the budget instead of too little.
Last year Henderson budgeted for gasoline to cost $1.40 per gallon, Morgan said, and that estimate worked well until the recent spike in prices. The city’s most recent shipment was still less than $1.60 per gallon.
The high fuel prices also are hitting the city indirectly through increased costs for supplies, whether the items are petroleum-based or are just more expensive to move from Point A to Point B.
The Kerr Lake Regional Water System’s budget request for chemicals, for instance, is $209,300, compared with projected spending of $183,000 this year and only $160,000 budgeted this year. The Water Reclamation Facility is seeing similar increases for chemicals, and Director Tom Spain said even the price of lime has exploded because of transportation costs.
The gasoline prices, however, are felt in every department.
City department heads were told to use $1.55 per gallon as the price for gasoline and $1.60 as the cost of diesel. Just as the directors submitted their budgets a month ago, gas prices took off.
The $1.55 price was the first question council member Mike Rainey raised during the first budget presentation this week (the Fire Department), and Finance Director Traig Neal said the budgets would have to be recalculated at a higher price.
Morgan said in an interview Thursday afternoon that the budget figures were likely to be $1.80 for gasoline and $1.90 for diesel. “I hope we fall under that throughout the year.”
Those prices would easily be the highest ever used in Henderson’s budget, he said.
But with pump prices for regular unleaded already ranging from $2.25 to $2.29 per gallon in Henderson, those figures might not be high enough. City Manager Eric Williams told City Council members Thursday night that he’s toying with recalculating the budgets with a gas price of $1.90 or $1.95.
The magnitude of the problem is clear when you consider how much fuel the city’s vehicles burn in a year. Morgan said the amounts for the current fiscal year are 101,415 gallons of gasoline and 39,170 gallons of diesel.
The possible 45-cent-per-gallon rise in projected fuel costs in the past month would increase the budget by more than $63,000 — slightly less than the first-year salaries of three rookie police officers or firefighters.