Gas price spike hits county budgets hard

By Jim Philipps
MEDIA RELATIONS MANAGER

In a release to the media, NACo said that this spring’s spike in gas prices is wreaking havoc on many county budgets at a time when revenues continue to shrink as a result of the housing and foreclosure crisis, and decreased investment earnings.

The Associated Press reports that gas prices are at a national average of $3.61 a gallon, well above the year-ago average of $3.04 a gallon. Diesel prices are at a national average of $4.24 a gallon, up from $2.88 per gallon in 2007.

The record high gas prices are affecting both rural and urban counties. Some counties are reportedly hundreds of thousands of dollars over budget in the current fiscal year and are seeking ways to lessen the impact of high fuel costs.

“The sudden spike in gas prices is causing great concern for the nation’s counties,” said NACo Executive Director Larry Naake. “Counties are in the early stages of a serious financial crisis as a direct result of the mortgage and foreclosure crisis, and are getting hit again with record high gas prices.”

A snapshot of counties struggling with high gas prices describes what steps are being taken to cope with the budget hits. In Oakland County, Mich., the sheriff’s department is considering switching patrol cars from eight-cylinder vehicles to six-cylinder vehicles to reduce fuel consumption. In Smith County, Texas, fuel costs are up 184 percent in five years, and the county is facing a $500,000 shortfall in its fuel budget this year.

Lee County, Fla. says it may have to cut programs to offset higher fuel costs. Pasco County, Fla. may end the practice of county workers driving county vehicles home after work hours. Belmont County, Ohio is considering purchasing its own gas tanks to avoid the federal gas tax.

(Click here for table)

Counties have been wrestling with budget shortfalls across the county in recent weeks. A NACo snapshot released March 24 found that reasons for the budget gaps cited by the local county officials include significant declines in property tax revenues, declines in sales tax revenues and rising gas prices. As a result, many of these counties are considering cuts in services to the public, hiring and salary freezes, budget expenditure reductions including layoffs, and raising taxes and fees.

“The initial wave of a fiscal crisis is upon us, and unless something is done at the federal level, more counties will be forced to cut services, layoff workers and raise local property taxes,” Naake said.