A Tracker Software Corporation Product

Around The Industry
By Gary Gleason

For the third consecutive quarter, Tracker Software queried clients across the country to get a pulse on recent trends, challenges and opportunities. Once again, budget shortfalls, fuel costs and the impacts of gas and oil exploration/production were on the minds of many.

Budget shortfalls
“Our big challenge is money,” said Chris Jacobson with the City of Lakewood, just west of Denver. “That is probably true for any city. But Colorado may be unique because we live off sales tax, so tends to blow more in the wind of the economy. With the gas price increases consumers are not spending like they used to. Also, the things that generate sales tax – the stuff you might buy at Walmart – have not inflated compared to health insurance, gas - things we have to purchase to do business. That means service cuts.”

Like many clients we spoke with, Jacobson said that they were looking at cuts that would not impact public safety, but Jacobson warned that across the industry service cuts may get more draconian.

“Right now we are looking at service cuts in parks and pools, but once that’s done, we’ll go after more important things. In five or six years it will start to hit police, fire, etc.,” Jacobson said, who is hoping for a favorable result in a proposed half cent sales tax hike on the ballot this November.

In north central Colorado Tammie Crawford from Routt County Road and Bridge noted that they must also postpone capital improvements in the face of challenging economic shifts.

“Fuel costs, power costs, and oil costs are all way up. Chloride for dust control is up 25%. We’re holding are own, but can’t do what we want to. We are looking at what we can cut, what can we not pave, what can we not chip. That, and miles and hours of driving,” Crawford said.

Bill Clark, Assistant Road and Bridge Superintendent in nearby Grand County, noted that high fuel costs were also affecting driving habits of the general public, and that it is hitting them economically.

“Out of our $7 million budget, only about $280,00 comes from property tax revenue. The rest is a 22 cent/gallon Highway Users Tax Fund (HUTF), which the state collects and disperses to the counties. With the high price of gas people quit driving. Fewer gallons pumped means less revenue,” Clark said.

Like Crawford, Jacobson and others, Clark said that they are looking at cuts in beautification projects, postponement of overlays and bridge replacements, and focusing resources on safety-sensitive projects.

But as Benson points out, “property owners don’t break it down that way, they just want to know why their road is not the way they want it.”

Many PubWorks customers noted that they were using PubWorks reports so elected officials could make informed decisions about where to cut. Jacobson noted that they have postponed refilling vacant staff positions as well.

Kevin Holderness, Engineering Coordinator with Mesa County Public Works in western Colorado, said that he is also using PubWorks as a tool to educate his commissioners on the condition of the assets they maintain, and the true cost of deferred maintenance.

“I think fuel costs are going to be one of the big issues for road departments, because you can’t do anything without fuel. Can’t do overlay, chip, or fix a pipe. At the moment we are falling behind on overlay projects due to increasing costs,” Holderness said. “We have been bumping projects to the point that we are now bumping back to 2007 projects that we meant to do this year. Our goal for overlay is 35 miles per year. This year we did 21 miles. Next year if we are lucky, maybe 4. Ultimately the software will help us prove [to the commissioners] that we are actually getting further behind.”

Gas and oil exploration
At the same time, record energy prices and relaxed environmental requirements are driving a new flurry of oil and gas exploration activity in many western states. This is something we have been reporting on for several months, and the issue only seems to be getting worse.

“Fuel exploration is hard on the roads. They run big trucks, and more of them, on roads that were not built to handle the loads,” Holderness said.

George Huntington with the Wyoming Local Technical Assistance Program is studying the problem. With funding from the Wyoming Department of Transportation Huntington is tracking public works assets and condition ratings in Carbon, Johnson and Sheridan counties over a three year period to quantify the change (see related story Asset Management).

“You have roads that probably had a couple heavy trucks in a month that are now seeing a dozen or more per day. Ranchers had the sense to stay off the roads during spring thaw and big rains, and you don’t always see that kind of consideration from the drilling companies. We are trying to get a better handle on what the dollar impact is,” said Huntington.

We had reported in July that impact fees were helping to off-set the added cost of road maintenance and repair, but Johnson County pointed out that there is a significant lag time between initial exploration and generation of new tax revenues to support public works/road and bridge operations.

“We get some bump in sales taxes and vehicle license taxes with all the development going on. We are also seeing some moneys based on valuation of real property like pipelines,” said Cheryl Benner, Resource Utilization Specialist with Johnson County Road and Bridge. “But production is valued and assessed at state level, so you are 1-2 years post-production before we see those revenues. Add to that 2 years of exploration before real production, and it is like five years from the start of exploration until funding reaches us. In the meantime you put a band-aid on the gushing artery.”

Johnson County Road and Bridge Superintendent Craig Cronk said they have also been hamstrung by loss of other resources, like gravel, to the well-funded gas and oil companies. Apparently the county used to barter services with local ranchers in exchange for gravel extraction rights, but those same ranchers have begun selling their gravel beds to the oil and gas developers.

The county has turned instead to BLM lands with surface and sub-surface rights. Benner noted that PubWorks is helping them to track how much material they are pulling out of these new pits, which is an important new reporting requirement for the agency. Additionally, Cronk said he is trying to establish gravel sites in locations across the expansive county to help reduce transportation costs, a resource they are tracking very closely these days. The Wyoming County is also using PubWorks to track costs on some new grant funding from the State Land and Investment Board, the Wyoming Department of Transportaion and the county that will fix 13 miles out of some 200 miles that are impacted [by mineral exploration and development].

“Nice to have a program where you can put your formulas in, and find out what you are doing” Cronk said. “The key is tracking the money, and getting new money in. We have old equipment on old roads. What I am wanting to know is if it would be cheaper to continue to repair, or buy new ones. That is the kind of information I need.”

That is just the sort of tool those of us at Tracker Software Corporation are working to give you. It is gratifying to hear that, despite the many challenges facing our industry, we are able to provide part of the solution.

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