(The Center Square) – As fuel prices across the nation have steadily increased in recent months, taxpayers may wonder how local governments are handling price shocks, and if they’ll see it come tax season.
The answer hinges upon how long gas prices stay high and, potentially, how strategic public officials are if they remain inflated long-term.
Officials from Chicago, Bloomington and Peoria all said their cities engage in long-term contracts to procure both regular gasoline and diesel fuels at fixed rates, mostly avoiding recent market fluctuations.
As the most populous city in the state, Chicago’s fuel procurement has been somewhat unique compared to other Illinois towns and cities.
David Powell, a project manager working in energy procurement for the city, explained the city has adapted its strategy in procuring fuel since the start of the conflict between the U.S. and Iran in March.
“We kind of switched our strategy around to do two to three month increments as opposed to a year just to try to capture as much savings as possible given the market fluctuations,” Powell said.
In other words, Chicago went from agreeing to buy 70% of its fuel at a fixed price annually – with the other 30% exposed to market fluctuations – to making those same fixed-price agreements over shorter periods.
With an estimated 110,920 residents as of 2025, Peoria’s current contract with a local fuel vendor is nearing the end of its term, according to Kyle Cratty, the city’s director of finance.
“We actually procure delivery service through local vendors to deliver the fuel. And in essence, what is kind of market pricing,” Cratty said. “We try to do multiple years. Usually we’ll try to do around three years.”
In Bloomington, the least populous of the three with a U.S. Census estimated 78,804 residents, City Manager Billy Tyus said the city contracts their fuel annually, and the city would spend significantly more if the high prices continue.
“The current impact is about $24,000 extra per month for diesel and like $30,000 extra per month for unleaded if prices remain the same,” Tyus said. “That’s almost $300,000 to almost $400,000 a year.”
As fuel prices remain high due to conflict between the U.S. and Iran, local governments may see worsened impacts, requiring changes to planned projects, shifts in budgets and potentially higher taxes in coming years if the conflict leaves a more permanent mark on the U.S. economy.
Tyus said Bloomington is considering the long-term impacts because capital projects they have planned for next year may need to be delayed in favor of immediately necessary city work – though he also noted the city’s financial reserves are “in a strong financial position.”
The cities are also seeing the immediate impacts of higher fuel prices in ways similar to everyday consumers.
Cratty said one place municipalities statewide are seeing impacts is in the new state contracted cost of road salt.
“It has dramatically affected the price of salt through the state contract. So last year’s pricing was around $80 a ton. The contracted price this year is almost $107 a ton,” Cratty said. “If we end up with a bad winter, there could be even more price crunch associated with that because again, salt isn’t the cost, it’s the trucking the salt from the river or whatever location that it’s barged in on.”
