Outdated accounting systems and rising fuel costs have contributed to a $3.6 million deficit in Montgomery County's fund for motor vehicles for the current fiscal year.
For the past four fiscal years, Montgomery's Motor Pool Internal Service Fund has operated at a deficit.
At the close of fiscal 2011, the county blamed a $3.19 million negative balance in the fund on various system errors, including its fuel management system's inaccurate billing and error reporting, projecting that addressing those errors in the current fiscal year would shrink its deficit to a little more than $300,000.
But $3 million in higher fuel costs, coupled with lingering problems with the fuel management system — as well as additional vehicle replacements — have the fund starting the next fiscal year deeper in the red.
The deficit is the "net impact of over-expenditures, primarily for fuel; under-expenditures in personnel costs; and the assumption that an additional $4.3 million will be spent on vehicle replacements in [fiscal 2012], funded by a transfer of that amount from the general fund," according to county documents.
When asked about the deficit by the County Council's Transportation, Infrastructure, Energy and Environment committee, county executive staff said the deficit mostly was an accounting issue.
"Part of the problem is that the fuel pricing problem has not been fixed," said Bruce Meier, senior management and budget specialist.
Montgomery just came to realize it had this problem about a year-and-a-half ago, he said. The county operates two independent accounting systems for fuel management, one that registers the price paid for fuel by the motor pool fund, known as RNI, and one that tracks fuel use and payment by departments, known as FASTER, Meier said.
"We are using two different systems that are not talking to each other," he said.
Montgomery projected it would pay $2.37 per gallon for unleaded, $2.55 for diesel, $2.38 for E-85 ethanol and $2.04 for compressed natural gas this year.
Actual prices were more than $1 higher per gallon on average, with unleaded running $3.61, diesel, $3.65, and ethanol, $3.19. The exception was natural gas, which stayed the same, according to county documents.
However, when fuel prices changed, FASTER was not always updated and usage was billed to departments at inaccurate and lower rates, Meier said.
Pending approval in the county's Capital Improvement Program budget for fiscal years 2013-18, a new system for fuel management should be in place by the end of the next fiscal year, Meier said.
Legislative analyst Susan Farag questioned if the fiscal 2013 fuel price estimates, which are below $3 per gallon, should be adjusted in the fiscal 2013 operating budget to reflect more accurate prices, as rising costs contributed to the current deficit. County Executive Isiah Leggett's spending plan proposed an increase of $5.38 million, or 8.8 percent, to $66.49 million in total for fleet management services.
“Projecting gasoline prices six to 18 months out, is, ah, I don’t even think it is an art any more,” Meier said after the meeting. “Nobody’s crystal ball works well.”
As long as actual rates for fuel are paid by county departments, fuel prices that are higher than estimated should not feed the motor pool fund's deficit, Meier said. Should fuel prices continue to rise, if properly accounted for, those higher costs would affect department budgets, not the motor pool fund.