Fuel costs impact city budget

But the good news is that overall, this year's budget is on target.

With the numbers at the pumps reaching the $3.50 mark, cities and counties across the nation must absorb the impact and Shelbyville is no exception.

Nationally, the average price rose 14 cents to $3.56 per gallon last week due to the high cost of crude oil.

As a result, city treasurer Gary Cantrell has been busy crunching the numbers in preparation for the 2008-09 fiscal year and said Shelbyville will start budgeting fuel by the gallon instead of the dollar.

"In the past, there's been a slow growth in fuel costs and you can use the dollar figure as a basis for your budget and keep track of it and we've always hit pretty well," Cantrell explained. But over the past few months, gas prices have gone "completely crazy," he added.

"Next year we're going to go by gallons and try to base our guesses on what we think where gas prices will be."

It also gives the city a chance to compare gas and gallons and see where cuts can be made, Cantrell said.

Fuel consumption by the city's various departments depends chiefly on their job, and the highest amount is used by Shelbyville's police department.

Law enforcement had $57,300 budgeted for fuel this fiscal year, but the spike in prices has put the police $21,400 over budget, representing a 37.3 percent hike in fuel costs for that department.

The fire department is $2,000 over budget out of an $8,000 fuel budget and public works is little less than $10,000 over out of a fuel budget of $62,000.

But with gas prices rising at the current rate, "who could not go over" their budget, Cantrell asked. The cemetery department is in the black, however.

The codes department is only $234 in the hole out of $1,500 when it comes to fuel budgeted for the 2007-08 fiscal year. General government is $77 in the plus category out of $650 budgeted for fuel.

"We're doing good on most departments until the last few months," Cantrell said.

"The hole doesn't keep getting deeper," city manager Ed Craig said. "But with every additional expense, there's appropriation for appropriations. Cantrell also said that they can track their cash flow month by month, but they do not have to move money around inside their budget like county government is required to.

"We do all of our adjustments at the end of the year," Cantrell said, while the county makes their changes every month.

Craig added while the police department is over budget in gas, it is under budget in other areas like personnel or other categories. "They're not over budget in the departmental budget," he said.

Cantrell added that power bills have also gone up as much as gasoline and that the city has paid more on power bills than for fuel.

"It's going to be a double whammy in next year's budget," Cantrell predicted.

But the good news is that the general fund summary for the entire city shows Shelbyville is actually ahead in its budget for the current fiscal year.

The year to date financial summery for the month ended March 31, 2008 shows that revenues are only minus 0.7 percent while expenses are just 2.4 percent over budget, leaving a net variance in the general fund of $172,641.

Craig said he was comfortable that Shelbyville would be on budget for this fiscal year. He said the city would budget for gas at "significantly higher levels" for next year.

The police department's fuel budget will likely be a third higher that it was last year, Craig said.

"We're not going to project it going down."

"We've always done good on gas and I think this year we will do well," Cantrell said. Department heads look at their budgets on a monthly basis and isolate where they were having trouble and what the cause is, he explained.

"So we will try to adapt when something first starts to be a problem," the city treasurer said.

And as this fiscal year winds down, Cantrell is already conducting meetings with department heads about the numbers for this coming year. He estimated that he could have a preliminary first draft of the 2008-09 budget by the third week of May.

The new fiscal year begins July 1.