How Valley cities are dealing with inflation
In August, the Bureau of Labor Statistics reported that inflation in the Valley was 13%, much higher than the national average.
Cities are paying up to 44% more for services like construction. Now cities are finding creative solutions to the problem. Just like consumers, municipalities face higher prices.
In Chandler, the city restructured contracts with maintenance service providers by more than 40%. On the other side of the Valley, Peoria reallocated half a million dollars for rising fuel costs. Cities are making the decision to pause certain infrastructure projects.
Kevin Burke, the chief financial officer for Peoria, says the decision is based on how drastically costs are rising. “Some of the pricing has just hit absurd levels and so if we can pause we probably should pause," he said.
Peoria is also seeing high prices in things more than construction costs.
"Not only are we seeing inflation in terms of commodities, we are also seeing inflations in terms of labor prices and that's a big part of a municipality’s budget is that we are very service driven," Burke said.
He says those costs have grown at least 5%.
Many cities are using their contingency budgets to cover unplanned costs. Chandler’s is $45 million. The city also added $4 million into their budget to combat price changes due to inflation.
Matt Dunbar is a budget manager with Chandler. He says those measures still may not be enough.
“We’ve seen though over the last few months that some of the those anticipated inflationary changes that we added have not been sufficient enough to cover some of the actual impact," Dunbar said.
Dunbar says there may be help on the horizon with the Inflation Reduction Act, but the city is still determining where those funds may be applied.