Utahns who've fueled up in recent weeks already know the effect of increased gas prices on their finances. But paying more at the pump could be just the beginning.
The skyrocketing price of gasoline is already affecting everything from delivery fees to state fuel budgets. But in many cases, the additional cost of doing business for both the private and public sector has yet to be passed on to consumers — or taxpayers.
"This could get ugly," said Steve Saltzgiver, director of fleet operations for the state.
The 4,500 vehicles in the government's fleet rack up 95 million miles a year. Thanks to a negotiated discount on gas and being exempt from paying taxes, the state's fuel costs were supposed to be $2.7 million this year.
But now Saltzgiver estimates that his fuel costs will reach $3.2 million by the time the budget year ends June 30. He'll have to dip into reserves to cover the $500,000 shortfall and, next year, raise the fees charged to use the fleet.
"We'll pass it back to someone in the future, and they'll pay it," he said. So where will the state agencies such as the Utah Highway Patrol and the local communities that participate in the fleet find the money to pay the bigger bill?
"The taxpayers," Saltzgiver said. "Exactly."
Utah food buyers are already feeling the pinch. Supermarkets are starting to pass along the higher prices they're paying for just about everything they stock, especially milk and fresh produce.
"The increases have been pretty incredible," said Steve Rich, Associated Food Stores vice president. "Initially we tried not to pass those increases on, to bear them ourselves and try to take them out of any profits we might have had. But they were getting to be so much."
Rich said customers should know that the higher prices for products sold by the chain of 600 independent stores in eight states, including Utah, still don't reflect all of the increase. Since grocery stores typically make only about a 2 percent profit, they're hurting, too.
"We feel it like they feel it," Rich said of the effects of higher gas prices that he doesn't believe will be dropping anytime soon. "We're doing everything we can to cut any expenses that we have."
So is one of the country's largest trucking firms, CR England. The Salt Lake-based firm has some 2,650 trucks that get only about six miles to the gallon as they travel in the United States, Mexico and Canada.
Factor in the recent 20-cents-a-gallon increase in diesel prices, and the fuel surcharge that the trucking company's customers pay jumps pretty quickly. "It's never that well received," said Mike Bunnell, CR England's senior vice president. "It's not a good thing at all."
State tax officials have their own worries about the impact of increased gas prices. Although motor fuel taxes have yet to be affected, studies have shown that a 10 percent jump in gas prices reduces consumption by as much as 4 percent over time.
And don't think higher gas prices mean the state is collecting more taxes. The state's share of taxes on gasoline is collected per gallon, so whether gas is $1 a gallon or $2, the state ends up getting the same amount — 24.5 cents per gallon.
Of even more concern, however, is what could happen to state sales tax collections.
"It's not because of people driving less that revenues go down," said Doug Macdonald, the state Tax Commission's chief economist. "But money is shifting from one part of a consumer budget" to another — gasoline.
Consumers end up cutting spending on entertainment, clothing, food and other items so they can afford higher gasoline prices, he said. The decrease in such spending could cost the state nearly $9 million this year, Macdonald projected.
That's a worst-case scenario, though. So far, sales and motor fuel tax collections aren't showing any signs of declining. The governor's office is keeping an eye out for possible budget shortfalls related to rising gas prices that could require emergency appropriations.
"It doesn't look like we're at that point yet," said Lynn Koga, the former state budget director and now Gov. Olene Walker's deputy chief of staff. "But definitely agencies are having to watch their budgets because it is hitting them."
Koga, however, remains optimistic that the state will still reach its overall revenue estimates "even despite any problems with the sales tax that might be created because of the gas price increase."
At the Utah Transit Authority, there are no plans to seek a fare increase or cut routes "at this point," according to spokesman Justin Jones. "We're not going to obviously rule it out."
With diesel prices zooming up nearly 50 percent over the same time last year, the bus system is already 2 percent over its $5 million annual fuel budget — that's $100,000. So far, there's enough money in UTA's contingency fund to take care of the increase.
"We are and will continue to watch the price of fuel," Jones said. "Our first option is always to cut non-service related budgets, non-service meaning any department that doesn't impact service to our riders."
Right now, that means less travel for employees and waiting longer to replace office equipment. Jones said UTA is counting on gas prices to drop again before the budget year ends on Dec. 31.
But UTA's budget woes could be compounded by the fact that the service is funded through a percentage of the sales taxes collected in counties along the Wasatch Front. If consumers slow spending, that means less money for UTA.
"We're hoping it does work out this year. It may not," Jones said. "We're not at all, at this point, in any kind of a panic mode, but we are monitoring it very closely."
Small businesses are grappling with higher gas prices, too. A pair of florists in Bountiful have already had to raise their delivery fees from $5 to as much as $9. Most Willow & Wildflowers customers have been understanding, co-owner Kelli Garrity said.
"I think we're very comparable as far as other floral shops go," she said. The shop, whose signature is the addition of a curly willow branch in every arrangement, had been charging all customers $5, no matter how far away their flowers were to be delivered.
But for the past few months, customers sending flowers beyond 4500 South in Salt Lake City have been paying more. The shop's single van makes as many as 25 deliveries a day and uses about $100 a week in gasoline, Garrity said.
"It seems like every day I'm forking out money for gas," she said, even though the shop has tried to be more careful about routing deliveries. Luckily, wholesale flower prices have yet to be affected.
Garrity said although she's concerned those costs could go up, too, she hasn't spent too much time fretting about it. "I'm worried more about pleasing our customers and keeping our delivery charge competitive."
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