Rising oil costs equal increase in street funding
The rising costs of oil on road projects means a proposed increase in the Town’s State Street Aid, both for the FY 2021-22 budget and the FY 2022-23 budget.
Town officials estimated a 20 to 25 percent increase in the cost, both for the current fiscal year and the one Farragut’s Board of Mayor and Aldermen is working on through budget workshops.
The Board received a report on the State Street Aid fund, along with other remaining funds,
during a March 24 workshop as part of its budget a process.
“This is our major funding for our resurfacing projects throughout the year,” Town Administrator David Smoak said. “We also have striping, guardrails, some traffic-calming (fixtures), general street maintenance that all go into this category.
“We receive funds from the state of Tennessee in revenues,” he explained. “We also take General Fund money and put it the State Street Aid to help supplement because there’re always more road projects to do and more resurfacing to do than we have money from the state for.
“We’re estimating that this year’s budget, FY2021-22, which [has] $800,000 currently, we will need to increase that up to $1.1 million to do the same amount of roads we did last year,” Smoak said. He attributed the increase to the increased costs in oil and gas, which goes into asphalt for repaving.
“So, we’re going to request we amend that amount … and then for next year (FY2022-23), in the proposed budget, we want to put in $1.2 million into resurfacing to, again, get the same level of streets we have now,” he added.
“With cost increases going the way they are, we need to be prepared,” Smoak stated. “That will reduce the overall fund balance to $1.7 million.”
“Are they thinking costs are going to continue to be elevated and inflation is going to continue?” Vice Mayor Louise Povlin asked.
“I think, certainly, they’ve seen in the last few weeks that costs have been relatively high,” Smoak answered.
“Contractors told us to expect somewhere in the neighborhood of 20 to 25 percent increase,” Town engineer Darryl Smith added.
“They all seem to think this next year oil prices are going to be relatively high,” Smoak said. “The good news is at the end of 2023, we project around $1.7 million in ending funding balance in the State Street Aid Fund, so we will have money in there if we need to increase some projects in the future.”
