"Pain at the Pump"-The Impact on State & Local Government
Thursday, May 22, 2008PAUL KANGAS: The rising cost of fuel is showing up in more places than the corner gas station. It's starting to take a toll on state and county budgets. Virginia's Fairfax County has one of the largest vehicle fleets in the nation, using nearly 10 million gallons of fuel each year. As we wrap up our series "Pain at the Pump," Stephanie Dhue looks at how the county is coping with sky high gas and diesel prices.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fairfax County, Virginia maintains 1,600 school buses in a fleet of more than 6,000 vehicles. It takes a lot of fuel, mostly diesel, to keep things rolling. To cut consumption and control pollution, the county has already restricted idling, reduced the number of cars it uses and shifted schedules to optimize efficiency. David Duvall is with the county's department of vehicle services. He says the main focus now is on hybrid vehicles.
DAVID DUVALL, FAIRFAX COUNTY DEPARTMENT OF VEHICLE SERVICES: Our effort is in understanding and promoting the concept, because we see it as a very viable near-term means of drastically reducing fuel consumption.
DHUE: Conservation has reduced the county's fuel consumption. But its fuel budget has soared from $14 million in 2005 to more than $40 million for fiscal year 2009. In fact for this year, the county's fuel budget is $800,000 in the red. At the same time because of falling property values, there is less revenue coming in from real estate taxes. Supervisor Gerry Connolly says Fairfax is feeling the squeeze.
GERRY CONNOLLY, CHAIRMAN, FAIRFAX COUNTY BOARD OF SUPERVISORS: That double whammy is putting a huge crimp in our style. We had to cut the budget to the point where, on the county side of spending, we're actually going to contract. We're actually going to spend less this next fiscal year than we did this fiscal year.
DHUE: One of the cuts, plans to purchase a hybrid school bus, which cost twice as much as diesel. Fairfax is also raising the property tax rate, although receipts are still expected to be lower. Connolly worries that services could be hurt.
CONNOLLY: If we got it wrong and it goes beyond $4.00 a gallon, we're going to have to find money that we don't really have and that means some service will have to be cut back.
DHUE: It's a familiar story for state and local governments around the country. Bill Pound who represents state legislatures, says states are making budget trade-offs.
BILL POUND, EXECUTIVE DIRECTOR, NATIONAL CONFERENCE OF STATE LEGISLATURES: It may be in terms of transportation and infrastructure, that you postpone a project, that you say we were going to do this in 2008. Now we're going to do it in 2009 or 2010. We'll just let matters get worse a little bit.
DHUE: There's been discussion about a holiday from gas taxes for the summer. But that would be costly for states, which depend on gas taxes to fund transportation projects.
POUND: It means if you're taking a situation where you've already got a problem and you're making the problem worse.
DHUE: With rising fuel costs and a slowing economy, state and local governments are tightening their belts. Many can draw on rainy day funds for now, but if the economy stays weak and gas prices stay high, they may be forced to cut spending or raise taxes. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Fairfax, Virginia.
