Fuel prices causing major budget crunch

TxDOT's Chris Lippincott said his agency is hit twice by high fuel prices.

"First of all, we have thousands of vehicles used in patrolling, building and repairing roads across Texas," he said. "That fleet has been hit hard by higher fuel costs. On the other hand, TxDOT is funded by the gas tax, which is about 20 cents per gallon and has not changed since the early 1990s. As gas prices rise, people begin cutting back on the amount of gasoline they use. That also hits us in the pocketbook."

Lippincott said TxDOT management ordered a 10 percent, across-the-board budget cut last year to accommodate higher costs and lower revenues. He adds, however, that the agency's use of alternative vehicles and fuels has dampened the effect of higher gas prices.

"We have begun converting many of the vehicles in our car pools to hybrids whenever possible. I drove a truck last week that ran on E-85 (ethanol). And the agency plans to find more creative ways to save on energy costs."

Elna Christopher with the Texas Association of Counties said local government agencies throughout the state are faced with a double-edged sword. She said most counties' fiscal years begin in October, so budgets are fixed for the year. Additionally, most fuel contracts have a cost pass-through clause, meaning counties have fixed budgets to pay for increasing fuel costs.

"Some of our members have been able to cut back a small amount on the use of vehicles, but not very much," she said. "Counties maintain and patrol thousands of miles of roads, and have no choice but to put the vehicles on the road and find the money to pay for them."

Christopher said counties with large populations might actually be better off than some rural counties. Areas with a larger tax base have more money to shift around than do smaller, rural counties. However, the rural counties may have as many or more miles of roadway.

School districts are feeling the pinch, needing to run thousands of school buses every day. For example, the buses in the Midland School District cover 765 square miles each day, using 2,500 gallons of diesel fuel.

Transportation Director Willie Tarleton said the district has a budget of just over $1 million for fuel, but has already spent more than half of that amount, which must last until August.

Sky-high fuels costs have meant a boost in ridership for many of the state's mass transportation systems. The Dallas Area Rapid Transit system, or DART, is reporting that 130,000 more people rode on its system this year than in January of 2007, a 9 percent increase.

The American Public Transportation Association recently announced that Americans took some 10.3 billion trips on mass transit in 2007, the largest number since the late 1950s. Light rail ridership, like all transit, began to fall after the interstate highway system was built. After reaching a low of 103 million riders in 1977, light rail ridership began to climb again. In 2007, it was at 431 million.

Airlines have been particularly hard-hit by higher fuel costs. One major airline, Atlanta-based Delta, has offered approximately 2,000 of its current employees a buyout package to reduce its operating costs. Other airlines, such as American and Southwest - both based in Dallas - are reducing the number of flights in hopes of increasing the number of passengers per flight.

In addition, the price of natural gas, which is used for almost 70 percent of power generation in Texas, has doubled since 2004. Even though Texas leads the nation in wind-generated power, the cost of electric power continues to rise, hitting large users such as cities counties and state agencies hard.

Economists are predicting a continued rise in fuel prices over the next few months, with some predicting that gasoline could hit $4 per gallon by Labor Day.