Inflation impacts municipal budgets and the tendering process | News, Sports, Jobs

Whether in the City of Williamsport, Lycoming County or municipalities and townships, inflationary pressures are causing officials to review their current financial situation and what can be expected in 2023.

“Inflation is causing a serious planning problem for local governments,” said Scott Williams, county transportation specialist. The next scheduled inflation rate update is September 13, nationwide.

“Many planned large infrastructure projects are intended to be funded by state or federal grants,” he said. “In order to prepare an attractive grant application, we need to have a solid and realistic estimate of project costs in order to know the appropriate amount of grant to seek.”

In most cases, granting agencies want to ensure that applicants use real numbers based on the type and amount of work that will need to be done, rather than guessing at what appears to be a good number.

Due to state and federal government review and award timelines for grant applications, county, city, and municipal officials must prepare project cost estimates in advance.

In the case of the county, it takes up to two years before an intent to let (tender) construction projects.

However, with current inflation rates hovering between 8 and 9 percent, the county is finding it very difficult to prepare cost estimates for projects that will be reliable for two years.

Jon Sander, professional engineer for the city, agreed with that sentiment.

“Estimates and actual costs are high,” he said, adding how “Contractors are doing their best to submit bids for projects with prices based on the lowest bid.”

In town, it has become a “challenge,” said Sander.

Also, he said, a quote for a project is only valid for a shorter than normal duration due to market uncertainty.

In Williamsport, City Council Speaker Adam Yoder said inflation had a direct impact on the city budget.

This impact is potentially substantial given the level of inflation.

For example, material costs for general government operations, city projects, and energy costs are a few items where the city budget could be “bitten”, Yoder said.

“This is a very concerning scenario, especially since the city has a current budget deficit of approximately $2 million,” Yoder said.

This can have an impact on taxpayers, depending on what happens during the budget season which begins in November and continues, usually, into December, with passages.

In the city, higher costs will reduce the carryover into the general fund that has been used to balance the budget in the past, Yoder said.

Since the city has continued to use deficit spending to prepare the annual operating budget, it is potentially at great risk, Yoder concluded.

“We may have some tough choices to make at budget time,” he said. “I hope not, but we have to prepare as if we do.”

Across the river in South Williamsport, Steven W. Cappelli, Borough Manager and Director of Public Safety, is also very concerned about the impact of inflation on the budget and costs of the project, in all.

“I am seriously concerned about rising inflationary costs as we develop street paving bit specifications for 2023,” said Capelli.

The average gas price in the state remains at $4.10 this week. The average diesel price was $5.37.

“With the cost of oil pricing, no one can guess how this will negatively impact the cost of the project,” said Capelli.

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