As gas prices in Brown County have fallen to the $1.90 per gallon range, Brown County and Brownwood ISD are reaping the benefits.
Brown County and Brownwood ISD are enjoying savings as gas prices in the county have dipped to $1.90 per gallon in recent weeks.
With each entity having passed budgets in the past few weeks, the savings are growing as anticipated costs are way above actual cost.
According to County Judge E. Ray West III, Brown County pays “the going price” for gasoline. The sheriff’s office, according to West, is the biggest county consumer of gasoline for its fleet of patrol vehicles.
“We don’t have a contract whereby we pay on an annual basis or a set price,” Judge West said. “We pay whatever the pump price is on the day we purchase gasoline. With gas prices going down and with as much gasoline as we burn in patrol cars it will have a significant positive impact on our budget.”
As gas prices have spiked and dropped over the past five years, the county has become cognizant of the trend and safeguarded itself in the 2014-15 and 2015-16 fiscal year budgets by increasing the line item for operating supplies in the sheriff’s office within the general fund.
In 2013, the county budgeted $188,000 for the sheriff’s office for operating supplies, which include fuel and maintenance, and wound up spending $220,751.77 that year.
“We wound up spending because of spikes in gas prices,” Judge West said. “We wound up spending $32,000 more because of fuel prices going up.”
In order to fill that overage in the budget, the county had to approve budget amendments to cover the cost of fuel for the sheriff’s office, while pulling funding from other areas within the budget, according to Judge West.
To safeguard that from happening again, the county has increased its budget line in operating supplies in last year’s budget and this year’s budget, according to Judge West.
The county budgeted $247,000 for operating supplies for the sheriff’s office in the budget that was passed last week.
“Since it is impossible to know on an annual basis how much gasoline is going to cost … it could start going back up tomorrow just because of what happens in China or the stock market,” Judge West said. “We try to be as conservative when we budget, but we anticipate higher prices.
“We budgeted the same amount for fuel this year feeling that is whether you want to call is conservative or liberal – that will be enough especially with the prices we are paying at the pump.”
If gas prices continue to remain at the current price range, the county will see a surplus in that particular budget line, according to Judge West.
“The price of gasoline is roughly one half of what it was last year, and if it stays there then we will be saving a significant amount of money,” Judge West said.
Judge West said that savings could be as little as $50,000 or as much as $100,000, depending on what happens with the price of gas in the not-so-distant future.
While the budget calls for $247,000 in operating supplies, the majority of it is fuel, according to Judge West, but other items are also taking into consideration when formulating the number.
“Actually the $247,000 is fuel for the fleet and then maintenance and repair,” Judge West said. “By and large, that is fuel.
“Because we figured in maintenance and repair that is the number we arrived at, but we have a lot of vehicles that are still under warranty. We replace vehicles on a cycle where we will buy three or four vehicles a year so that we don’t find ourselves with a fleet of old, worn out vehicles.”
With the majority of the maintenance and repair falling under vehicle warranty, Judge West gave an “educated guess is 80 percent of the budget line” is gasoline.
The low numbers not only impact the county. The low numbers have an impact on taxpayers.
“(Low gas prices) are beneficial to the county because what we don’t spend simply goes into next year’s fund balance,” Judge West said. “We save money on fuel because fuel prices are lower and we budgeted the same amount this year that we budgeted last year. That will go a long way towards not having to increase taxes next year, because that will increase our fund balance.”
“When we calculate the necessary revenue, we add into it what is leftover from the previous budget year. The higher the fund balance the less we have to increase taxes to have enough money to run the business of the county.
“The cost of doing business always goes up. The savings we have on fuel will offset that increase to an extent. So, this time next year, we are going to be looking at a much higher – if gas prices hold – fund balance at the end of the year and therefore less of a need for a tax increase.”
For Brownwood ISD, Kevin Gabaree, who serves as assistant superintendent, said the district is in good shape as it took gas prices into consideration when writing this year’s budget.
“We budget for fuel expenditures based on an estimated price,” Gabaree said. “Then if gas prices drop during the year that will do well for our budget.
“Last year, we saved around $50,000 compared to what we budgeted,” Gabaree said of the drop in gas prices and how if affected the budgeting process, “due to the drop in prices.”
With the price drop in oil, and gasoline, the school district was active when creating this year’s budget.
“We did decrease our budget this year knowing that gas prices were lower,” Gabaree said. “We gave ourselves room in the budget if gas prices were to rise again.”
Plus, there is one major benefit to Brownwood ISD.
“It allows us to spend more money on students than filling up gas tanks of buses,” Gabaree said. “We just shift money around. Just like in all years, if there are items within the budget that cost less than what we forecast in our budget that is nothing but a positive effect on our budget.”
Looking into the future of gas prices and budgeting, Judge West said history is the best teacher.
“We will hope that what happened in 2013 doesn’t happen in 2016,” Judge West said. “That is one of the reasons that we budgeted the same amount for this fiscal year as we budgeted for our past fiscal year is that we don’t know what gas prices are going to do.
“Which, of course, we don’t know what a barrel of oil is going to be selling for in the summer of 2016. If oil goes back up to $80 or $90 a barrel, obviously we will be paying more at the pump and we will have budgeted enough to take care of that. If the price of a barrel of oil remains static throughout the year, we will have a surplus and that will go into the fund balance for the following budget year. Plus, we will budget less for fuel based upon prior experience.
“The only way to budget unknowns is to look at the history. We just have to go back and see what has been spent in previous years because we don’t have the crystal ball, unfortunately, so the best we can do is rely on our history.”
Judge West is confident the county won’t have to execute any budget amendments in the future.
“If gas prices go up, we hope we have budgeted enough,” Judge West said. “I think we have. The $247,000 we budgeted this year was adequate for the first nine months of the year when we did have $3-4 gasoline.”
Brent Addleman is managing editor of the Brownwood Bulletin. He can be reached by calling 325-641-3110, or email email@example.com. Twitter: @BWD_Editor.