Inflation impacts municipal financial budgets

Officials face fiscal difficulties now, likely in the future

WILLIAMSPORT -- Counties, municipalities and townships facing inflationary pressures are causing officials to take a second look at their current financial pictures and what can be anticipated in 2023.

"Inflation is causing a serious planning issue for local governments," said Scott Williams, Lycoming County's transportation specialist. The next scheduled inflation rate update is

Sept. 13, nationally.

"Many large planned infrastructure projects are intended to be state or federal grant funded," he said. "In order to put together an attractive grant application, we have to have a solid, realistic estimate of the project costs so we know the proper amount of grant funding to seek."

In most cases, granting agencies want to see that applicants are using real numbers based on the type and amount of work that will need to be performed instead of guessing what seems like a good number.

Because of state and federal government review and award timelines on grant applications, county, city and municipal officials have to prepare project cost estimates ahead of time.

In the case of the county it is up to two years before an intention to let (bid out) projects for construction.

However, with current inflation rates hovering in the 8 to 9% range, the county is finding it extremely difficult to prepare cost estimates for projects that will be reliable for two years.

Engineer Jon Sander agreed with that sentiment.

"Both estimates and actual costs are high," he said, adding how "contractors are doing their best to submit bids for projects with awards based on the low bid."

It has become a "challenge," Sander said.

Additionally, he said, a quote for a project is only good for a shorter duration than normal due to the uncertainty in the marketplace.

Material costs for general government operations, city projects and energy costs are a few items where budgets could be crunched. That can impact taxpayers, depending on what occurs during budget season which begins in November and continues through, typically, December, with passages.

In South Williamsport, Steven W. Cappelli, borough manager and public safety director, also is highly concerned about the impact of inflation on the budget and project costs, overall.

"I have a serious concern over inflationary cost increases as we develop street paving bit specifications for 2023," Cappelli said.

The average gas price across the state remains $4.10 as of this week. Average price for diesel was $5.37.

"With the cost of petroleum pricing it is anyone's guess how this will adversely impact project cost," Cappelli said.