A nationwide increase in fuel prices is hitting the wallets of local governments, with both Southold and Riverhead towns feeling the impact. At barely past the half-year mark, some departments have already blown through their annual fuel budgets.
The war between Russia and Ukraine, along with some other factors, has led gas prices to hit record highs in 2022 with the nationwide average ticking above $5 per gallon in June. Although prices have dropped in recent weeks, the average price for regular gas in New York on Aug. 15 was $4.17, according to the U.S. Energy Information Administration, about a dollar per gallon higher than prices around the same time last year.
“I just did a study about four months ago, and basically everything went up like two dollars per gallon,” said Mike Zaleski, Riverhead’s highway superintendent. “So we’re all preparing our budgets for next year and preparing for the rise in all these fuel costs. I would say it’s increased on a percentage by 50% at least, close to 60%.”
Southold Town Supervisor Scott Russell similarly estimated a 50% increase in fuel expenditures if trends stay the same, although that may not be the case if costs continue to drop.
The police and highway departments are among the most heavily dependent on fuel costs, he said. The Southold Police Department, which originally budgeted $110,000, has already spent $112,000 on fuel by mid-August and the highway department, which is normally allotted around $105,000, has already been allocated approximately another $34,000 for fuel.
Some other programs, such as Meals on Wheels, have also been impacted, he said, although that’s been offset by hybrid and electric vehicles.
Mr. Zaleski also noted the impacts to the police and highway departments, adding that every department has been impacted.
“Even on a smaller scale, buildings and grounds will be riding lawn mowers every day. Across the board, it’s really affected [Riverhead] town,” he said.
Riverhead’s Finance Administrator Bill Rothaar said the town hasn’t needed to make budget transfers yet due to the increases in fuel prices, which have been going back down recently. The highway department cut its fuel costs from $180,000 to $170,000 this year, he noted.
“We cut gas because we needed to cut something and we had not spent it all in highway,” he said. The Riverhead Town Board sets the highway budget.
Mr. Rothaar said that the town would, if needed, “find a line in highway budget and then when we needed it — let’s say in November or December — we could transfer that into the gas budget. But right now, we have no lines that are overspent or near being overspent.”
While fuel prices are usually volatile and difficult to predict, this year’s spike has put Southold Town “in a situation where our actual costs will far exceed what we had estimated originally for fuel costs, and there’s no way to escape that,” according to Mr. Russell.
“When you’re budgeting at the beginning of the year, you’re looking at trends over the past two, three, four years. I like to go back sometimes as far back as five years if I can, depending on what I’m budgeting for,” he said. “The problem is, the budget that I present to the board every fall, it’s a best guess-estimate based on previous costs of previous expenditures.”
Southold Town buys fuel in bulk by state bid and has its own fuel depot with two 7,500 gallon tanks, according to Mr. Russell. The additional funding is drawn from contingencies, a portion of the budget set aside to cover unforeseen costs.
“There’s peaks and valleys and you need to be able to absorb those in any budget,” Mr. Russell said. “Is it challenging? Absolutely. But it’s a large budget. And one of the things about falling short in any one line, it forces you to be conservative and look at other lines. That should be your first instinct, is to say, where can we find the funds to pay for this? By cutting back on other parts of the budget. That’s the challenge.”
The toll fuel prices have taken on town budgets shouldn’t be a surprise to anyone, he added.
“Things fluctuate from year to year. Fuel tends to be very volatile. We’ll adjust, we’ll be fine,” he said. “When you run government, you’re going to find these challenges. This happens to be more challenging than most but we’ve been through things like this before and we’ll muddle through just fine.”