Fuel Prices May Cost State $100m
Sep. 3–Rapidly rising fuel prices could cost Massachusetts and its cities and towns more than $100 million in extra energy spending this year, further straining budgets that have not recovered from the recent recession, Governor Mitt Romney said yesterday.
Romney, appearing at a State House news conference with Attorney General Thomas F. Reilly to discuss gasoline price-gouging, said the Legislature may have to consider a supplemental spending bill later this year to cover fuel costs for state vehicles and buildings, and to help cities and towns pay for theirs.
“That includes municipal costs. That’s schools, that’s hospitals, state hospitals, police cars, it’s prisons,” Romney said. “That’s real dollars that we care about.”
City and town officials, and officials at other government agencies, said yesterday they expect rising gas prices to squeeze their budgets.
Lisa Signori, Boston’s chief financial officer, said the city’s fuel costs for its vehicles probably would exceed its budgeted amount by between $1.5 million and $2 million. And although Boston saved almost $1 million when it switched electricity providers last fall, that contract expires Dec. 1, which means the city may see a significant spike in prices when it looks for bids this fall.
Signori said Boston is watching closely for other ways fast-rising fuel costs could affect its budget, which hit $2 billion for the first time this year.
“We’re going to monitor the changes in the marketplace and adjust accordingly,” she said. “Anytime you have price increases you’re not planning for, they’re a concern.”
In Worcester, school officials already have set aside one-quarter of the district’s supplies budget — which pays for crayons, copy paper, and other classroom essentials — to cover the rising cost of diesel fuel for buses. In Revere, school officials have canceled all out-of-town field trips.
Geoff Beckwith of the Massachusetts Municipal Association, which lobbies for cities and towns on Beacon Hill, said cities may ask the state for help, but “we’re still working with the Legislature trying to get the snow relief money from last winter.”
“These cities and towns have to patrol the streets, they have heavy equipment, they have to heat their buildings with heating oil,” Beckwith said.
Beckwith said in addition to powering their vehicles and heating their buildings, local officials are worried about helping residents who may not be able to afford high home heating bills.
Carmen Fields, spokeswoman for Keyspan Energy Delivery, the dominant supplier of natural gas to households and government entities in eastern Massachusetts, said the company has a significant supply of natural gas in storage, and has already locked in the price of two-thirds of its winter supply, so “that hopefully will mitigate some of the price hikes that we’re experiencing now.”
But Fields said she could not predict when or if the cost of natural gas would stop rising.
“We’re watching it very closely and doing all we can to keep increases to a minimum, but we are also looking to the government or policymakers to further develop transportation infrastructure, enhance opportunities for conservation, and aggressively pursue alternate fuel sources,” Fields said.
Cities and towns are not the only ones getting hit. Even before Hurricane Katrina, rising fuel costs had caused a $10 million shortfall in the budget of the Massachusetts Bay Transportation Authority after the first two months of the fiscal year. The latest cost increases will open that gap wider, an agency spokesman said yesterday.
“The soaring cost of fuel is making it exceedingly difficult to maintain a balanced budget,” said T spokesman Joseph Pesaturo. “If prices continue to rise, the MBTA will be facing some extraordinary financial challenges in the months to come.”
At his morning news conference, Romney said each additional cent in the per-gallon price of gasoline costs state and local governments about $1 million. He based his $100 million estimate on a one dollar-per-gallon increase over last year’s cost, a level he said had not yet been reached.
By the afternoon, however, prices had exceeded that threshold. The fallout from Hurricane Katrina pushed the average price of unleaded regular gas in Massachusetts to $3.19, up 58 cents from Monday and $1.29 more than a year ago, according to the American Automobile Association of Southern New England.
By Scott S. Greenberger and Raphael Lewis
Globe staff writer Lisa Wangsness contributed to this report.
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