Natural gas, budgets and BS

by Michael Tilley (mtilley@talkbusiness.net) 39 views 

Some in the upper levels of Fort Smith city leadership have said the city has cut expenses as much as possible and the best/only way to fix budget holes is to raise taxes and/or fees. That’s BS. Lemme explain.

The Fort Smith Board of Directors is struggling to address three broad budget issues.

First, the city has a history of deficit spending in recent years. There is a fancy accounting term for this, but the practical result is that the city’s “savings account” may not be able to survive too many more years of being surprised at the end of the year when the waiter shows up with the bill and we’re all a little short.

Second, the Fort Smith Board struggles to find options to plug an anticipated shortfall in the city’s police and fire (LOPFI) contribution fund. The estimates show the fund balance at $5.731 million by Dec. 31, but reaching a deficit of $419,042 by 2021. Based on estimates, additional spending reductions and revenue increases totaling around $2 million annually are needed to keep the LOPFI contribution fund solvent beyond 2030. Sure, the estimates could change based on future equity market gains, but the responsible thing is to now budget for the worse and hope for the best. We are where we are now because “responsible” and “budget” have not always been used in the same sentence when the gavel tapped out the final vote on the city budget.

And then there is the estimated $480 million federal edict that could see Fort Smith citizens paying out the you-know-what to better control what comes out of the same place. The estimated $480 million includes $375 million capital costs and $104 million in additional operations and maintenance expenses to prevent human waste and other waste from entering “U.S. waters.” The agreement gives the city 12 years to invest the needed funds to fix the sewer system and implement new monitoring systems.

Fort Smith Directors Keith Lau and Tracy Pennartz have been a pleasant surprise in their willingness to peel back the layers of the Fort Smith city government onion. They continue to ask the most direct, confrontational and often unpleasant question: “Why?” Here’s what you, Kind Reader, need to know about the question, “Why?” The status quo hates the “Why?” question. That’s why you can spell “status quo” without using one letter needed to ask, “Why?”

We need Lau and Pennartz, and the others, to keep asking the “Why?” question. And it’s here we get back to the BS of no more room to cut expenses.

The city's fuel (gasoline and diesel) bill in 2013 was $2.325 million and $2.356 million in 2014. It's likely to be less in 2015, but will probably top $2 million. It is not unreasonable to assume that an aggressive push to add compressed natural gas vehicles to the city fleet – including police vehicles and some fire vehicles – could reduce the fuel bill enough to reduce the annual fuel bill by $1 million. Yes, $1 million. That’s more than 2% of the city’s general fund budget. That’s not chump change, especially if part of the goal is to reduce expenses by 3%.

City staff, including Acting City Administrator Jeff Dingman, has said their analysis shows CNG is not practical. That’s BS. To believe Fort Smith would not benefit is to suggest the execs at Greenwood-based Alpha Packaging and Fort Smith-based Boyd Metals made bad decisions to convert their truck fleets to CNG. To believe Fort Smith would not financially benefit from a CNG conversion is to ignore an avalanche of real-world private-sector data.

Use of CNG for truck and delivery fleets has grown in recent years. UPS is using more than 600 CNG vehicles and has plans to add 1,400 more. The company recently contracted with TruStar Energy to build 15 CNG stations in 11 states. The Anheuser-Busch distributor in Houston has worked with Ryder to convert its fleet of 66 tractors to CNG. The deal is part of a larger goal by St. Louis-based Anheuser-Busch to reduce emissions and fuel costs in its private fleet of more than 600 vehicles. CNG sales in Texas during 2014 rose 78% over 2013. Texas Railroad Commissioner David Porter has said CNG vehicles “are becoming mainstream faster than expected.”

Such examples could go on for several paragraphs.

Such a conversion in Fort Smith would not be simple. It would need to be worked into the city’s vehicle replacement plan – assuming the city has one. It may also take 2-3 years to see the significant savings. Fort Smith Board members also would need to resist claims that CNG vehicles aren’t appropriate for the police fleet. That’s BS. Also, the Board would need to ensure city staff aggressively adjusts the vehicle replacement plan to cover part of the conversion cost, then begin to utilize fuel savings to feed more conversions. This could reduce the upfront financial burden.

Not only would the city of Fort Smith have a modern, fuel-saving vehicle fleet, but the vehicles would reduce emissions, reduce maintenance costs and feed the natural resources industry that feeds a part of the Fort Smith regional economy.

If the Board or a top city staffer comes to ask your support for a tax or fee increase to address budget problems, the only way you should consider it is if they show up in a CNG-powered vehicle. If not, let ‘em know you’ve got no time for BS.

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