Municipal Fleet Budget Trends for 2016

Since the recession of the past decade, many municipalities have struggled with shrinking budgets as they work to continue to meet needs with less tax revenue due to the employment struggles of those they serve. For those responsible for municipal fleets, these shrinking budgets have caused a closer look at budgets and a need to cut costs. Municipal fleet managers face a difficult task of continuing to provide the high quality services to those who live in the community while maintaining a strict budget. Determining what costs to prioritize can be difficult, and making a balanced budget requires give and take between departments. Here are some of the priorities and decisions that fleet managers are facing as they prepare for the 2016 budget.

Aging Fleets in Need of Replacement

Throughout the economic downturn, fleets made due with the vehicles they had. This allowed budgets to hold steady without the high cost of vehicle replacement. Some municipalities actually pushed the length of time they kept their fleets in service several years past the averages of the 1990s.

Unfortunately, those aging vehicles are starting to fail to meet the need of the fleets. This, in turn, has created a demand for more money as the fleets look to replace these aging vehicles in this year or the coming years, so they can continue to provide reliable service.

Yet where that money will come from is not always clear. Replacing vehicles is a significant cost, and some municipalities do not have savings set aside for this cost. This means that they either must raise taxes in order to cover the cost, or find places to cut fleet-related costs in order to find the resources to pay for replacement vehicles.

A Shifting Focus on Maintenance

Maintenance is another high cost for municipal fleets, as vehicles must be properly maintained if they will continue to provide the needed service. Maintenance is also one place where the give-and-take is necessary.

In the past, it was common for municipalities to have their own on-staff maintenance division. While this is certainly a convenient way to care for vehicles, and it does ensure that there is always someone available to maintain or repair vehicles when needed, the reality is that on-staff maintenance service providers, and an on-site maintenance facility, adds overhead. Some municipal fleet managers are finding a more cost-effective solution in transferring the care and maintenance of their fleets to contracted service providers, freeing up money to be used for other costs.

Because most fleets operate with the basic minimum of vehicles they need to fulfill their tasks, maintenance also brings concerns about return-to-service rates. Fleet solutions that allow vehicles to be repaired within 48 hours, limiting downtime, are preferred over those that leave vehicles tied up in repair for weeks on end. Today’s municipal fleets simply don’t have enough vehicles to cover this time if one is in the shop for an extended period.

Managing Fuel Consumption

Fuel use accounts for a significant chunk of the municipal fleet budget, and a continuing focus on managing fuel consumption, and lower it when possible, is expected to continue into 2016. Strategies for managing fuel costs fall into two main categories. First, fleets can use fleet analytics, telematics and strategies to encourage fleet best practices to decrease the amount of fuel wasted through poor driver behaviors. Second, fleets can invest in alternative fuel vehicles when upgrading their fleets, but the cost of purchase and the savings gained must balance to make this a viable option.

Right Sizing Fleets

Right sizing refers to choosing the right size and type of fleet vehicles for the task at hand, which helps fleets run as efficiently as possible without sacrificing customer service. Right sizing fleets continues to be a priority, especially with the increase in demand to replace outdated vehicles.

As the deadline for 2016 budgets is fast approaching, the demand to address some of these issues is in the mind of the municipal fleet manager. The struggle to maintain the delicate balance necessary in municipal fleets remains an ongoing concern. Through fleet analytics, and perhaps even with the help of a fleet consulting firm, municipal fleets can craft a budget that will work, in spite of these challenges.

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