According to Government Fleet Magazine, the biggest challenge facing public sector fleets in 2011 is budget constraints due to the decline in tax revenues over the past few years. Public entities are funded largely through sales and property taxes — the two areas most devastated by the economic downturn. Successful fleet management for the public sector essentially boils down to revenue versus costs and maximizing fleet efficiency.
Public sector fleets are currently feeling the pressure to lower capital expenditures and reduce operating costs to compensate for tax revenue shortfalls. This is quite a challenge for public sector fleets, as the economic crisis has caused reduced funding resulting in older fleet assets and budget cuts have caused staff layoffs. There is an ongoing push to minimize fleet capital procurements by keeping vehicles and equipment in service longer. All capital expenditures are being intensely scrutinized. Capital purchases are deferred or eliminated completely and in most cases, total capital expenditures are reduced.
Fleets are taking various steps to address these economic constraints. The silver lining to tighter budgets and fiscal problems is that fleets have been able to make operational changes not otherwise feasible in other years. Successful examples are widespread decreases in the number of take-home vehicles, fleet right-sizing and consolidations, along with optimized fleet efficiency with telematics enabled GPS fleet management systems.
The challenge for fleet management is to stretch the capital outlay budget as far as possible. Defrayed vehicle purchases must be considered and weighed against the increased expenses of operating an aging fleet. Other funding sources may need to be considered to offset the lack of capital funds, such as lease agreements. Cooperative purchasing agreements are increasingly considered for vehicles, equipment, and parts purchases. Vehicle cannibalization programs and the purchase of used parts have also been considered.
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