Explanation
Background: This ordinance authorizes a supplemental appropriation of $1,430,000 for the Fleet Management Division of the Public Service Department. The appropriation is needed as a result of higher than anticipated costs for fuel.
As of the 2005 Second Quarter Financial Review, the Fleet Management Division projected a fuel deficit of $1.4 million, at an average cost of $1.97 per gallon. Since the mid-year financial review, however, the division has witnessed dramatic increases in fuel prices. As of August 29, the average fuel cost was $2.30 per gallon (for all grades of fuel). As of September 1, 2005, fuel prices rose sharply to an average cost of $2.80 per gallon. The latest price increases are due directly to the damage caused to oil production, pipeline, supply facilities and refineries by hurricane Katrina. The Fleet Management Division projects fuel prices to remain high through September (close to the current $2.80/gallon) and then level off at approximately $2.50/gallon for the remainder of 2005. These fuel price increases will require the city to expend an additional $800,000 for fuel before year-end, escalating the combined fuel deficit to $2.23 million.
The 2005 budget appropriated $5.56 million for fuel purchases (3.54 million gallons at $1.57 per gallon). Total fuel expenditures for 2005 will be approximately $7.79 million. The city spent $5.2 million for fuel in 2004 and $4.7 million for fuel in 2003.
This ordinance will authorize a general fund transfer. This legislation will transfer $800,000 of the second quarter review's projected personnel surplus in Police and $200,000 of the projected personnel surplus in Fire to the fleet line item for Fleet's largest general fund customers: Police, Fire, and Refuse. The transfer of funds will allow these divisions to continue to purchase Fleet services despite the higher than anticipated costs for fuel.
This ordinance also authorizes a street construction, maintenan...
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