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Title:
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Consideration of a budget amendment to appropriate funds to the Equipment Maintenance & Fleet Services Division in the amount of $200,000 to cover fuel purchases through the remainder of FY05-06.
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City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
That the City Council authorize a budget amendment to appropriate funds to the
Petroleum Products account 30868900.520000 of the Equipment Maintenance &
Fleet Services Division of the Transportation Department in the amount of $200,000
to cover fuel purchases through the remainder of FY05-06.
A 4/5ths vote is required to adopt a budget amendment.
BACKGROUND:
The Equipment Maintenance & Fleet Services Division of the Transportation
Department is responsible for the purchase and distribution of fuel for all City
vehicles, including the compressed natural gas powered fleet.
The Fiscal Year 05-06 adopted budget for Petroleum Products was $1,070,000.
After considerable spikes in the cost for natural gas after Hurricane Katrina (a 42%
increase), and the subsequent rise in petroleum fuels since July 2005 (a 45%
increase) the division has utilized its initial budget for fuels. We have also utilized an
additional $100,000 in funds specifically appropriated for possible fuel increases in
an appropriated reserve line item.
Staff has analyzed projected fuel purchase costs, and has concluded that an
additional $280,000 is needed for the remainder of this fiscal year.
Meeting Date: 05/22/06 Item Number: A-7
AGENDA ITEM: That the City Council authorize a budget amendment to
appropriate funds to the Equipment Maintenance & Fleet Services Division in
the amount of $200,000 to cover fuel purchases through the remainder of
FY05-06.
Contact Person/Dept.: Paul Condran Phone Number: 310-253-6520
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: []
Public Notification:
Master Notification List (05/18/06)
Department Approval:
Stephen Cunningham (5/11/06)
CAO Approval:
Jerry Fulwood 5/18/06
City Controller Approval:
Marlee Chang 5/17/06City of Culver City, California
City Council Agenda Item Report
DISCUSSION:
Costs for petroleum fuels continue to rise nationwide. Our suppliers have indicated
that the costs for diesel fuels may reach as high as $4.00 per gallon (wholesale rack)
due to the regulations mandating the exclusive use of Ultra Low Sulfur Diesel fuels.
Costs for unleaded fuels appear to be leveling; however, our most recent price paid
for a full load of unleaded fuel was $3.17 per gallon, including all taxes and fees.
These increases have created an unforeseen excess expenditure for petroleum
fuels in the amount of $165,000.
While costs for natural gas have declined, and appear to be relatively stable at this
time, the spikes experienced in the months of September through December of 2005
caused unforeseen increased expenditures for compressed natural gas in the
amount of $115,000.
Staff’s conservative projection for petroleum fuels and compressed natural gas
expenditures for the remainder of the fiscal year equals $280,000.
Unfortunately, we cannot predict what political, social or environmental factors may
impact future prices. Staff has continued to work with suppliers to obtain the lowest
rack price available. We have also determined that long-term contracts which lock in
our cost at OPIS-price-plus margins are not in the best interests of the City, and
have actually impeded the ability of other municipalities and agencies to obtain
competitive prices for fuel.
The increases in fuel cost are expected to be sustained at these higher levels for an
unknown period of time; budgetary adjustments are anticipated.
FISCAL ANALYSIS:
The funding sources for this additional $280,000 are proposed as follows:
An $80,000 transfer from within our own Divisional FY05-06 budget. Staff has
submitted an Appropriation Amendment Transfer as of the writing of this report, with
transfer anticipated shortly. The remaining of the $200,000 will be allocated to all
user departments. The breakdown is: Transportation Fund ($110,900), Sanitation
Fund - $20,554, Sewer Fund - $960, General fund - $67,586. Each department has
sufficient funds to transfer into their Equipment Maintenance accounts to cover these
anticipated increases in fuel cost within their existing budgets.City of Culver City, California
City Council Agenda Item Report
It is recommended that the budget amendment proposed herein be adopted in order
to allow staff to continue to purchase fuels for the City’s fleet operations for the
remainder of this fiscal year.
MOTION:
That the City Council:
1. Authorize a budget amendment to increase $200,000 in the petroleum account
(account # 30868900.520000) in Equipment Maintenance & Fleet Services
division for the purchase of fuels through the remainder of the Fiscal Year 2005-
2006.
AND
2. Authorize Accounting and Budget Office staff to facilitate the appropriated
transfer of funds prior to May 31, 2006.
A 4/5ths vote is required to adopt a budget amendment.