Fleet Budgets Struggle

By Staff | September 28, 2010

Funding levels for government fleets varied across the nation last year, with five regions increasing and three decreasing. Big gainers were Mid-South and Mountain regions, and the Northern Plains reported the greatest decrease. As a group, governments did slightly better than expected.

This year, every region except two, Great Lakes and Northern Plains, expect funding increases. The largest increases are anticipated in the Mid-Atlantic and Mountain regions. Overall, funding is forecast to increase a net of 9 for government fleets.

State government funding increased sharply last year, netting at 25 against a forecast of -4. Local government funding, however, met its meager forecast of net 2.

Work volume for both segments of government exceeded expectations. Both groups netted at 23, with states having forecast -7 and locals 16. Both expect 2008to be a bit higher than 2007.

The number of states reporting expanded fleets outpaced slightly the forecast for last year, but local governments expanded at a far more aggressive pace. Expansion is expected for both in 2008.

Fleets expanded at expected rates in 2007,in line with previous years. They go separate directions for this year, though, with states expecting a rate of 10.7 percent, locals 5.8 percent.

State fleets rebounded sharply in 2007 after a slight increase in 2006 funding. Local fleets, on the other hand, barely stayed at current funding levels. Overall, 27 percent of government fleets reported increased funding levels in 2007 against 23 percent who said funding decreased, for a net of 4. Although better than the 2006 net of 6, government fleets were hoping for better.

State fleets reported a net of 25, with 38 percent increasing funding levels and only 13 percent saying funding had decreased. On the local side, 26 percent reported increased funding levels minus 24 percent reporting decreased funding for a net of only 2.

For this year, 35 percent of state government fleets expect funding to increase and 17 expect it to decrease, leaving a net of 18, the first double-digit net forecast since 2000. Locals, on the other hand, forecast a net of 7. Although 32 percent say funding should increase this year, 25 percent say it will decrease.

For local governments, work volume continues to outstrip funding. In 2007, 31 percent of local fleets reported volume, measured in total machine hours, increasing and 7 percent reported it decreasing for a net of 24. States reported a similar net, with 33 percent increasing minus 10 percent decreasing. This year, 36 percent of states and 32 percent of locals expect volume to grow; 8 percent of each expect volume to decrease. Nets, therefore, are 28 for state governments and 24 for locals.

Local fleets saw more growth activity than state fleets, as measured in number of machines in the fleet. On the local side, 29 percent of fleets grew while only 4 percent shrank, for a net of 25. This was double the net expected for 2007. State fleets expected a net of 2 this year, and were only able to beat that slightly with a net of 8. Twenty-five percent of state fleets increased in size; 18 percent decreased. For this year, states lag local fleets in expectations of fleet growth. Although 23 percent of state fleets say they expect to grow, 18 percent expect them to decrease for a net of 5. Local fleets, however, net out at 23. Twenty-eight percent say fleets will grow minus only 5 percent that say fleet size will decrease.

Fleet replacement rates, on the other hand, were nearly the same in 2007. States reported a rate of 8 percent; local government fleets replaced 7 percent. Next year, however, the two forecasts head in opposite directions. States expect to replace 10.7 percent of their fleets; locals expect to replace 5.8 percent.

Both fleet growth and replacement rates affect the condition of the fleet. Government fleets are rated either “excellent” or “very good” by 49 percent of respondents. State fleets were rated slightly lower than locals.

Government fleets generally purchase outright when they acquire major machines valued at more than $25,000, with 85 percent reporting usage of this option. Only 12 percent use financing, and 13 percent use short-term rental. Overall, however, 58 percent of government fleets use short-term rental to meet equipment needs.

Equipment-related workforce size stayed the same for the majority of government fleets. Total workforce decreased for 22 percent of fleets and increased for 17 percent for a net of -5. Service and maintenance personnel employment stayed the same for 83 percent of fleets, the number of machine operators stayed the same for 72 percent, and other hourly labor remained consistent for 73 percent.

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