Public Sector Fleets:
Take-Home Vehicles: Ending the Culture of Entitlement
August 27, 2008
By Mike Antich
Take-home vehicles have been controversial for years, but in this era of high fuel prices, they are under intense scrutiny at a number of jurisdictions. Governments are having difficulty justifying the assignment of take-home vehicles, especially when citizen taxpayers are paying $3.83 per gallon for gasoline and the cost of fuel is causing repeated requests for additional funding to compensate for budgetary shortfalls.
When the price of fuel is low and budgets are flush, the issue of take-home vehicles slips under the public radar. However, today’s elevated fuel prices and stretched budgets are prompting the local media and elected officials to question unnecessary use of government vehicles. As a result, there have been a number of backlashes against take-home vehicles around the country.
For example, the City of Buffalo, N.Y., has slashed the municipal fleet of take-home vehicles by 11 percent. In the current fiscal year, the City of Buffalo is $1.1 million over budget for fuel expenditures. In the past, Buffalo take-home vehicles operated on an honor system. Vehicles were assumed to be used only when driving to and from work or to attend work-related functions. Now, any vehicle available for take-home use is monitored by spot checking and weekly reports provided by the City’s fuel tracking system. In fiscal year 2007-2008, the total cost for fuel for all Buffalo city-owned vehicles was $2.9 million. Of that total, $231,958 was for take-home vehicles, or 8 percent of the entire fuel budget for the City of Buffalo.
In another example, the City of Indianapolis is facing a budget shortfall due to unexpectedly high fuel prices, projected to exceed $4 million. One strategy is to reduce take-home vehicles or add a surcharge for their use. Approximately 1,650 City police officers have take-home vehicles with unrestricted off-duty use.
However, eliminating take-home vehicles is easier said than done. A number of proponents (primarily those with assigned take-home vehicles) argue the benefits outweigh supplemental expense. The most vocal proponents for take-home vehicles are typically police departments. One justification for take-home policies is lower maintenance costs and increased accountability. Many police vehicles are “hot-seated.” The police believe that if one officer drives one car, you can get a longer life out of that car than with a swap-out. The other benefit is that officers on-call while at home will be ready to roll at a moment’s notice, providing better call response. Plus, a marked police unit parked in a driveway can act as a neighborhood crime deterrent.
Reasons Against Take-Home Vehicles
The best ways to control take-home use is to have department heads and executive-level management review the justifications provided to the fleet manager. A fleet manager should not be the “utilization police,” put in the position of enforcing vehicle usage policy. This is the purview of executive management. Often, agency justifications for take-home vehicle assignments are weak or, in extreme cases, fraudulent. Sometimes, the fleet department is not informed about take-home assignments even though it is responsible for approving, monitoring, and reporting on take-home vehicles. Even if informed, fleet operations may approve take-home vehicle assignments based upon inaccurate information about the purpose and use of the vehicles.
Take-home vehicles increase operating costs and capital replacement expenditures. Taking a vehicle home reduces the economic life of a vehicle. If it is driven 33 percent for take-home use, a vehicle’s business life is reduced by one-third, and it must be replaced earlier than the same vehicle not being driven home.
Another reason against take-home assignments is the expense of acquiring additional vehicles so one vehicle can be assigned per officer. In addition, take-home vehicles increase liability exposure for the jurisdiction, especially during off-duty usage.
Misuse of a take-home vehicle also results in noncompliance with federal tax requirements. Fringe benefits, such as use of a vehicle for commuting purposes or medical benefits, are considered a form of pay. The fair market value of such benefits must be included in the employee’s wages unless specifically excluded by federal tax rules. Another issue is the distance take-home vehicles are driven. Employees at some agencies are not required to live within the boundaries of the jurisdiction. I have heard of employees commuting 40-100 miles to live in outlying areas where they can purchase larger, less expensive properties. They do not pay the commuting costs; taxpayers foot the bill.
Cost vs. Benefit
Take-home vehicles are expensive and often only assigned as a perk. To justify the assignment of a take-home vehicle, the benefits of taking a vehicle home must outweigh the supplemental cost of doing so. In most cases, the cost outweighs the benefits.
Let me know what you think.
mike.antich@bobit.com