Oil prices fueling cost-cutting creativity among counties

Hennepin County, Minn., which has seen its fuel expenditures jump from roughly $1 million in 2004 to a budget of $3 million for 2009, recently instituted an idle-reduction policy that requires county drivers to turn off their vehicles immediately after reaching their destinations. Likewise, operators of off-road equipment must turn off their engines when attendants are on break or at lunch and must not allow engines to idle at any location for more than five minutes.

Hennepin County’s Public Works Management Support Department, which purchases and maintains all county fleet vehicles through an internal service fund, also is phasing in hybrid and alternative-fuel vehicles, using biodiesel in diesel vehicles and making sure that replacement vehicles are “right-sized” for the job.

The department is mulling other measures. For example, instead of sending each customer agency a monthly invoice that covers vehicle depreciation, fuel, maintenance and other costs based on rates that are set annually – its current practice – the department is considering charging fuel use back to each agency via a separate invoice that indicates how much fuel each vehicle in that agency consumed that month, Public Works Management Support Director Maurice Gieske told GovPro.com.

“So if we’re in an environment where fuel prices continue to go up, those agencies are going to set their budgets at a certain level. And if they’re going to exceed budget because of spending more on fuel, they’re going to have to cut someplace else,” Gieske said, noting that the idea is in the preliminary stage. “It’s about trying to be more visible about what fuel is costing and putting it in [customer agencies’] hands, because they’re the ones who are managing these pieces of equipment.”

Other options being considered include fuel hedging and teaming up with neighboring cities and counties on a fixed-price fuel-purchasing contract, Gieske added.

And like many government fleet administrators, Gieske is paying close attention to developments in vehicle technology.

“One of the things I’m excited about is some of the plug-ins that are going to be coming out, like the Chevy Volt and some of the [plug-in] utility vehicles,” Gieske said. “If we could get 100 miles per day out of a utility vehicle that you just plug in at night – that would be absolutely wonderful.”

Still, Gieske sees awareness and education as perhaps the county’s most viable short-term strategies.

“I think that the biggest thing that I see at this point is getting that information into the hands of those folks that are consuming the fuel by the change in billing and forcing them to find ways to reduce their consumption, given that they now know what they’re consuming,” Gieske told GovPro.com.

Large urban counties putting all options on the table

Hennepin County certainly is not alone in putting all options on the table. In a survey conducted in June by the National Association of Counties (NACo) to get a sense of the impact that fuel prices are having on large urban county governments, 22 out of 31 county officials indicated that they are purchasing hybrid, flex-fuel or alternative-fuel vehicles. More than half of the survey respondents said that they are trying to reduce idling times, and more than half indicated that they are emphasizing right-sizing vehicles for specific tasks.

No fewer than 11 of the 31 public works directors, fleet managers and other administrators who responded to the survey indicated that they are considering:

• Reducing the size of their fleets.
• Limiting take-home privileges.
• Selling less-efficient vehicles.
• Renegotiating fuel contracts.
• Limiting vehicle use for essential tasks.
• Driver education focusing on fuel efficiency.
• Retrofitting less-efficient vehicles.
• Relocating services to reduce travel times for county business.

County officials also wrote in a number of strategies that were not on the survey, including four-day workweeks, fuel hedging, carpooling, interdepartmental “energy-savings work groups,” cooperative purchasing agreements and rationing fuel for certain county vehicles.

It’s not hard to see why county officials are, in some cases, trying to think outside the box: According to the NACo survey, 62 percent of county officials said that their fuel expenditures have increased by 21 percent or more in the last six months. Sixty-eight percent said that their fuel expenditures have spiked more than 21 percent during the last year.

Right-sizing and downsizing

In Collin County, Texas, which has approximately 570 pieces of rolling stock in its vehicle fleet, fuel prices are having “a dramatic impact,” according to Jon Kleinheksel, director of public works. Kleinheksel told GovPro.com that Collin County Public Works has moved to a four-day workweek in hopes that having the department’s heavy equipment offline for an extra day will provide some budgetary relief. And the county took away take-home vehicle privileges for nonessential personnel about a year ago.

Like Gieske, Kleinheksel said that he is looking closely at hybrid and alternative-fuel technology, including compressed natural gas and liquefied natural gas vehicles.

“We’re just looking at all the options,” Kleinheksel asserted. “We’re seeing what’s out there and what we can do.”

In Clark County, Nev., which spans some 8,000 square miles, fuel prices have been on the county’s radar “for a long time,” David Johnson, manager, automotive services, told GovPro.com. That’s why the county has the largest hybrid fleet – around 400 vehicles – in the state of Nevada and has more than 1,200 vehicles running on biodiesel, according to Johnson.

Still, with fuel prices on the rise – Johnson noted that the county is renegotiating its biodiesel contract due to a spike in the supplier’s cost of raw materials – the county is “highly scrutinizing any requests for new vehicles,” Johnson told GovPro.com.

“I sit down with all fleet coordinators and ask them if it’s really necessary or if there’s a way we can fulfill the requirement without adding to the fleet,” Johnson said. “We’re trying to downsize wherever possible. We ask them things like, ‘Do you truly need a 1-ton truck, or will a ¾-ton truck work for you?’”

No more take-home privileges

The trend of limiting take-home vehicle privileges is gaining momentum, and not just in large urban counties. Officials in Campbell County, Wyo. – with a population of nearly 40,000 residents – recently voted to revoke 35 county employees’ privileges to take home their county-issued vehicles. The policy, which takes effect Aug. 15, does not apply to law enforcement and other essential vehicles in the county’s fleet.

Campbell County Fleet Manager Rod Warne told GovPro.com that the policy should save the county at least $54,300 per year in fuel and maintenance costs. Warne added that the county likely will save even more than that, as that estimate was made in March – when the county’s cost of gasoline was 68 cents cheaper than it is now.

County officials admitted, though, that their decision had little to do with fuel prices.

“It’s the right thing to do from the standpoint of the taxpayers,” said Dan Coolidge, chairman of the Campbell County Commissioners. He added that the county has been mulling the issue for about six months.

Regardless of why the policy has been implemented, county employees who have grown accustomed to having a take-home vehicle – some county departments have been granting take-home privileges for three decades, according to Warne – “weren’t tickled about” the new policy, Coolidge told GovPro.com. The county is allowing affected employees to make a formal request to be exempt from the no-take-home policy, and Coolidge said that he expects exceptions to be made for key personnel such as public works employees who are on call for maintenance.

“What was interesting is that each person who already had assigned [take-home] vehicles could do their justifications [as to why they should be allowed to take their vehicles home], and all 35 who had vehicles felt like their vehicle was justified,” Coolidge said.