Minnesota cities, counties burn through fuel budgets amid rising gas prices

Shocked at how much it is costing to fill up your car with gas these days? Imagine running a city fleet of some 400 vehicles — many of them gas guzzlers.

Gas prices peaked recently near $5 a gallon in the Twin Cities. Motorists filling up their cars and trucks are not the only ones feeling the pinch. Governments, with their squad cars, dump trucks, fire engines and park equipment, are scrambling to make sure their spending remains on budget and their vehicles remain on the road.

Roads and highways still need to be paved. Bridges require maintenance. Properties have to be assessed. Balancing services and increasing fuel and oil prices adds another curveball in an already trying pandemic.

"We're projecting we will be coming in over our fuel budget," said Taylor Gronau, assistant city administrator of Buffalo, Minn. "However, a lot of those trips are necessary and needed."

Many Minnesota communities are trying new ways to cut costs.

The city of Buffalo is urging carpooling and checking tire pressure on its vehicles to improve gas efficiency. Several Minneapolis agencies have considered expanding an e-bike program for home inspectors to get around town. And several communities are trying to add more electric and hybrid vehicles to their fleets — only to find huge backlogs.

With high gas prices trending more than halfway through the year, some city officials are worried about having enough to cover fuel costs and subsequently cutting costs or overspending on government-owned vehicles.

More than 50 local governments are under state fuel contacts, which cover a majority of fuel purchases in bulk and at a fixed rate, throughout a yearly basis. However, many local governments still rely on buying more fuel to cover all usage of vehicle fleets, which has increasingly hurt their fuel budgets.

Bigger urban areas, such as Minneapolis and Ramsey County, handle hundreds of vehicles, that span different departments, including police, fire and parks and recreation. Smaller cities such as Buffalo and Maplewood have smaller fleets, meaning that each city's budget for fuel varies.

But most city officials agree that they expect to raise their fuel budgets next year.

The situation may get worse when the winter arrives. Some city officials expect that they will reach the full budget or go over after the winter.

During cold weather, snow storms and major weather events dictate fuel usage, said George Hargrove, service team controller of finance and accounting for Ramsey County Public Works. Having enough fuel to plow the snowy roads plays a significant role in fuel budgeting, city officials said.

"What we're really watching for is what the weather's like come October, November, December. Especially, November and December," Hargrove said. "Because if it doesn't snow much or we don't have ice storms and things like that, then we'll be all right."

In Redwood County in southern Minnesota, most of its 875 square miles are rural. Bid prices for contracts have definitely been affected by higher fuel prices, County Administrator Vicki Knobloch Kletscher said.

"You have a sheriff's office that is working 24 hours seven days a week," she said. "The gas increase is really hitting their budget. Farmers are getting hit as well."

Hennepin County has more than 1,200 vehicles, including squad cars and ambulances. The county has a $1.7 million fuel budget for 2022, and it has used $425,000 so far. It has more than a dozen hybrid cars and has ordered more, but there is a backlog at dealerships, fleet manager Jay Baldwin said.

"We plan to replace any gas vehicles with hybrids or electric when they can be replaced," he said. "We also have switched some smaller equipment from gas to battery-operated."

Some cities have already started to transition to electric or hybrid vehicles. For example, St. Louis Park passed a Climate Action Plan in 2018 to reduce 25% of vehicle emissions by 2030 by replacing current fleet vehicles with electric vehicles and evaluating gas-powered equipment for replacement.

In 2020, Minneapolis bought hybrid squad cars which increased the miles-per-gallon rate from 8 miles to 14. In addition, hybrid squad cars don't require the engine to run for the lights to be on, unlike older squads, said Al Thunberg, director of the Fleet Services division for Minneapolis Public Works.

"The increased miles per gallon has saved us a lot of money as well, regardless of how much you're paying per gallon," Thunberg said. "Every gallon less you buy, you're saving money."

Earlier this summer, Minneapolis started a program that gave inspectors the option of taking e-bikes to jobsites. It saved wear and tear on the vehicle fleet and cut the city's gas consumption. Several other city agencies, from IT and Public Works staff to the Park Board, were looking at the program for themselves.

Buffalo is one of the cities not partnered in a Minnesota state fuel contract that relies on retail gas stations. To make travel less expensive, Gronau said city workers try to reduce the amount of weight and drag in the vehicle or they carpool or check the tire pressure.

"So, things like that, that probably makes an incremental difference," he said.

According to AAA, the national average for a gallon of gas has decreased by a nickel to $4.75. However, many economists believe that gas prices have not peaked.

At this point of the year, many cities are trying to determine next year's budget for fuel. Some are deciding to raise their fuel budgets.

Anoka County, which contracts with an oil company for gas, has used nearly half of its $1.2 million fuel budget for 2022, said the county's chief financial officer, Cory Kampf.

The county is actually seeing mileage and gas equipment usage go down slightly because they have been able to hire part-time workers during the pandemic, he said. Lawn mowing isn't done as frequently, and there will probably be fewer plow drivers this winter.

"We just have to be innovative on how we provide services," he said.