Jefferson City officials likely will have to consider how to address an aging fleet of vehicles, and some officials may be looking for a more global approach in addressing the issue.
The Jefferson City Council has spent the last month discussing the proposed budget for the 2015 fiscal year, and in one budget presentation, a long-term issue was raised - deferred maintenance on city vehicles.
Operations Division Director Britt Smith told the council the street division alone has roughly $6 million worth of vehicles and $2.9 million of that is at or past its service life. Council members were told it would require a $250,000 annual investment from the city to stabilize that life expectancy, without improvement, but it would take a $500,000 annual investment to improve the overall fleet to where city staff says it should be.
But how did the vehicles get to that point? Largely because the city has no formal replacement program or schedule.
Currently, the city handles vehicle replacement in a budget-by-budget process, Smith said, which works well as long as the city has the money to spend on any needed replacements. But for the past few years, that money has not been available.
How we got here
The city didn't always rely on a budget-to-budget process. It was only after a previous program failed to provide the expected results that the method changed.
Smith said it was about 2004 when the city had a huge problem with its fleet. A bulk of the city's vehicles needed to be replaced and maintenance could not be deferred any more, leading the city to purchase 40 new vehicles for $920,000, all of which came from the city's reserve funds.
The plan, which was spearheaded by former Community Development Director Pat Sullivan, centered around having the city purchase vehicles at lower costs using pre-negotiated state contracts. At the time, the most popular vehicles, which were sports utility vehicles and pickup trucks, were selected in hopes they would retain their resale value.
However, the vehicles did not sell as well as expected. Smith said the city bought the best-selling vehicle, an SUV, which quickly dropped to one of the worst-selling vehicles when gas prices began to rise. Because of that, the program failed to work, Smith said, and all ordinances related to it were repealed.
"That plan has basically been abandoned," Smith said.
In 2007, the city made the switch to assessing vehicle-replacement needs in each budget process, funding replacements as needed.
Budget-to-budget
Smith said the budget-to-budget process works well, but because of a series of tight budgets, funds for vehicle replacements have been cut.
"Obviously, when times get tough, you attack luxuries," Smith said. "The investment in the street department has waned off, and our (fleet) age has crept up. So that's where we are. And it's no one's fault."
Each year, he said, department directors sit down and prioritize their fleet like any other aspect of their budget. If the city can afford to fund the request, it will, but money has been tight and replacements sparse.
Smith said there are 277 vehicles in the city's fleet, which does not include vehicles belonging to the Parks, Recreation and Forestry Department. For the street department, Smith said the average age of their vehicles is 12 years of a 12-year life cycle.
"Forty-seven percent of the current fleet is at or past its expected life," Smith said.
Smith said the issue with older vehicles is they can endanger the safety of city employees and often cost more to repair and maintain over the long term than purchasing a replacement would be.
A global approach
Smith said he would like to see vehicle replacement be approached with a more scientific look, instead of each department trying to find money for their vehicles.
"We'd certainly like to get it to be more of a ... global look at it," Smith said. "That was the advantage of what we were trying to do with the vehicle replacement and equipment replacement program, was to take a more global look at the entire fleet and treat it as one unit."
City Administrator Steve Crowell agreed, saying one thing the city is working on is a long-range financial plan that would look at all capital purchases and when they can expect to need a replacement. The plan also looks at how much the city would need to invest and when.
"One thing we want to do is to try to take a multi-year look, not only for vehicles, but for expenses," Crowell said.
In the plan presented to the council Thursday by Bill Betts, director of finance and information technology, 86 pieces of equipment and vehicles were laid out as needing to be replaced within the next five years. The total cost of all vehicles and equipment listed would be more than $3.8 million over the five-year period.
Crowell said there are a number of ways the council can opt to fund vehicle replacements. Money could be put aside slowly for vehicle replacement throughout a number of years, funds from the reserve balance could be used or the capital improvements sales tax money could be used, he said.
"It could be a combination of a lot of things," Crowell said.
But what he'd really like to see is a way to expend money for it evenly over time, he said, so that there isn't one large expenditure one year and no investment the next. That would enable the city to have a general idea of when vehicles will need to be replaced and be able to plan for that expense in a better way.
Without that, the list of vehicles needing to be replaced could continue to grow until it's difficult to combat all at once, Crowell said.
"It just catches up so fast," he said.