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March 30, 2022 - 6:00 AM
Most municipalities in the Thompson and Okanagan regions put their 2022 budgets together long before the Ukrainian invasion and long before fuel prices skyrocketed.
That means a potential multi-million shortfall if prices continue at March levels for the rest of the year.
“If things keep going the way they have in March, we could end up with $700,000 to $800,000 of additional costs,” Mac Logan, general manager of infrastructure for the City of Kelowna told iNFOnews.ca.
The city spends about $100,000 a month on gas and diesel for its fleet and experienced a 30-40% increase in March.
It also pays about the same again for its share of fuel for the transit system.
“The only silver lining, if you will, is transit ridership tends to go up as the price of gas goes up,” Logan said. “We get a little bit back through the fare box but not as much as it costs, maybe a third of that, and you can’t bargain on that.”
Vernon city council, yesterday, approved a budget amendment to add $320,000 to its budget this year for potential fleet shortfalls.
Most of that will be for gas and diesel but parts have gone up and tires are up 19%, says the report that went to council.
Last year, Vernon used 427,000 litres of gasoline and diesel, paying $1.27 per litre for gasoline and $1.29 for diesel. Those prices have now jumped to $1.81 per litre for gasoline and $1.99 for diesel, the report says.
Penticton is forecasting $25,000 to $26,000 in higher fuel costs in the first quarter of the year.
If prices continue at present high rates, that could translate into a $120,000 shortfall by the end of the year, Len Robson, Penticton’s public works manager, said.
Kamloops staff are analyzing their costs and will report to council’s Committee of the Whole next Tuesday.
The total for the three Okanagan cities listed here is near $1.5 million.
READ MORE: Price of gasoline to skyrocket this spring in Kamloops and the Okanagan
So, while there’s no doubt that gas prices are hitting cities hard, the question is how will they cope with the increased costs?
In Penticton, Robson said they will try to find extra money from other sources within the budget but quarterly reviews will be prepared.
Vernon and Kelowna are looking at drawing on reserve funds, if necessary.
Given the steadily increasing costs of fuel last year and the inflation fueled by the world emerging from COVID, some of the increases were expected and already factored into the 2022 budgets but the Ukraine invasion could not be predicted.
Still, business goes on.
“We are not changing our level of service,” Logan, in Kelowna, said. “The transit level of service is staying the same. The operating levels of service are staying same. So, we have to find ways to cover the cost of the fuel and find savings in other areas.”
Some of those are longer term, like plans to convert the Central Okanagan transit fleet to electric, buying electric vehicles for city staff where feasible, buying smaller vehicles when possible and combining trips when appropriate.
Gas at most stations in Kelowna list a litre of regular for sale at $1.83.9 while most in Kamloops are at $1.89.9, according to GasBuddy.com.
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