Cities factor low fuel costs into new budgets - KWWL - Eastern Iowa Breaking News, Weather, Closings

Cities factor low fuel costs into new budgets

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Dubuque (KWWL) -- Gas prices are at three-year low, nationally nearly a dollar per gallon lower than one year ago. Iowa has 11th lowest prices in the country, averaging a $1.74 according to gas-buddy.com.

Cities are working to factor changing gas prices into next year's budgets, and low gas prices are helping and hurting the budget for some city departments.

Keeping all of these city vehicles ready to go takes a lot of fuel, so low prices are easing some financial concerns for Public Works.

"It's great what we're all experiencing right now, a drop in fuel prices. We had budgeted for fuel prices higher than what we're paying now, but we didn't budget high enough for the fuel prices we were paying last summer, so now we're making up for the overruns from July, August, September," Public Works Director Don Vogt said.

With heavy snow and high fuel costs last fiscal year, public works director Don Vogt had to cut some equipment purchases and delay capital projects to stay in budget.

Right now, the city is looking at the budget for the next fiscal year, this time gauging fuel costs by averaging the last three years.

"That will take into account some lower price times and some higher price times, so it won't go to an extreme either way. We won't assume prices are going to skyrocket back up or that the decline will continue," City Manager Mike Van Milligen said.

But Vogt says low gas prices go along with a worrisome trend: Gas consumption has dropped. After increasing for two years, this year has a projected 0.3% decrease, only rising 0.8% sometime next year according to the Energy Information Administration.

"That's cause for concern because if there's less fuel being used, that's less gas taxes being paid. The hope is the converse will come into effect; that as fuel becomes cheaper, people will do more driving like they used to and be a counter effect to what happened earlier this year," Vogt said.

Road use tax money from gas sales pays for things like snow removal and road repairs and could impact projects next year. For now, Vogt anticipates being able to keep the budget on track.

Online Reporter:  Jamie Grey

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