By Patrick Newhook/February 3, 2022
City council continues to grapple with surprise surcharges when trying to purchase new vehicles for its fleet.
The latest case came before council last week when councilor Isabelle Fry announced the City is in the process of purchasing a dual string recycling truck and a rear load garbage truck from Saunders Equipment Limited.
However just like the previous meeting, Fry said the trucks will be more expensive than previously thought.
“The public works department received a letter from Saunders Equipment Limited dated December 21 stating that due to the unprecedented cost increases and vigorous supply constraints over the past couple of years there would be a cost increase or commodity surcharge applied to each of the units,” said Fry.
“The recommendation from our committee is that the commodity surcharge of the dual stream recycling truck and the rear load garbage truck … to be supported in the amount of $10,925 dollars, HST included, which can be accommodated within the fleet budget,” she added.
Councilor Bill Antle asked how the increase will impact the fleet budget, noting that if they keep having to spend more than initially estimated, there’s going to be budget issues.
Infrastructure and public works director Gerry Antle responded by saying the extra charges can be accommodated in the fleet budget and that it won’t have any impact. He also estimated that new tender calls will eventually stabilize and they won’t have to keep having to pay more.
Councilor Antle then followed up by pointing out that two weeks ago it was an overage of $6,000 and now its $10,000 He asked director Antle about when he expects to see the end of this. “This is $16,000. Our budget is finite and we just did our budget,” said the councillor.
Director Antle reiterated that he thinks the situation will stabilize. “I don’t think we’re going to continue to see this with our new tenders… Throughout this spring and summer this will stabilize,” he said.
Councilor Mark Rice commented that the cost increases may need to be factored into new budgets.
“Once we get away from COVID and we get away from the times where a lot of countries and states are not supplying that raw product, I think we might see the trend go down, but right now I’m thinking that trend will stay the way it is because of the supply and demand of the raw product,” he allowed. “You cannot get certain items. This is something we might have to look at, revisiting sometime the fall when we go to look at our budget for next year.”
Fry said it’s not just the City that’s contending with the problem.
“This is something that is unavoidable,” she said. “If we want these vehicles we have to pay the surcharge and we do want these vehicles because on the other side is that we’ll be spending much more money in vehicle repair or maintenance for the trucks that we already have. If we don’t pay the surcharge and get these vehicles now it could be a couple of years down the road before we even get them… At this point this, in my opinion, is our only option.”
Councilor Jim Locke supported the action.
“These are sort of surprises now, these are ‘after the facts,’ these are things that we didn’t budget for, but going forward these surcharges, or any increased costs due to the supply chain issues that councilor Rice mentioned, they will be embedded into the bids, so they won’t be after the fact expenses,” Locke said. “So, I agree that this is probably the last we are going to see because we don’t have any large tender items to come forth. But when we bid on new equipment, if it’s still a supply chain issue, that will be contained in the tender prices.”
Councilor Antle asked how the city can spend more without losing something else in the process.
“We aren’t going to increase the fleet budget by any means, so at the end of the day we are going to lose something, right?” said Antle. “That’s my fear. Are we going to lose a small pickup truck, are we going to lose some equipment out of the fleet budget?”
Mayor Dave Aker assured Antle the city is doing fine financially and won’t need to do anything drastic.
“There’s no doubt this is COVID inflation and the purchasing power of the budget is going to be less,” said the mayor. “What are you suggesting that we do? We have an envelope that’s worth around $1.5 million for 2022. I can’t recall the budget right now for 2021, but I’m assuming we will continue to order the vehicles as we always have. But to your point councilor Antle, we aren’t going to run out of money. Based on $6,000, that’s actually a low inflation rate, but there’s no doubt that we’re either going to order less vehicles out of that budget or Director Antle, you’re going to have to cut back on the specs.”
After more discussion, council voted unanimously to proceed with the purchases.
