By Paul Gottlieb
Peninsula Daily News
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The PUD will pay 75 cents a mile beginning today, the board decided in a 2-0 vote, with Commissioner Ted Simpson absent.
The IRS rate is 56.5 cents after it was increased by a penny in January.
The board’s action lowers the existing reimbursement rate from 79.5 cents under a policy commissioners established in 1995.
Since that time, the PUD has paid 23 cents a mile above the IRS rate to encourage employees to use their own cars, to reduce the district’s fleet and “to more closely cover the actual cost of driving a personal car on district business,” according to the minutes of the meeting in which the original decision was made.
The IRS rate was 30 cents a mile in 1995.
The IRS rate is used by governments, school districts and taxpayer-funded entities throughout Clallam and Jefferson counties, including the Jefferson County Public Utility District.
Anything paid above the IRS rate is considered taxable income.
Commissioners based their decision Monday on a four-page analysis by Sequim certified public accountant David Papandrew, who estimated costs that would be incurred if the PUD bought three additional pool vehicles for local and out-of-area travel associated with PUD work.
The analysis was prompted by a December 2012 review of the mileage-rate policy by Peninsula Daily News, when Commissioner Hugh Haffner told the newspaper that the policy was “something we probably should have looked at five or 10 years ago.”
Papandrew said local travel and trips between PUD facilities would cost more than $1.10 a mile if the PUD purchased three vehicles.
He based the amount on factors such as fuel consumption for vehicles estimated at 18 to 22 miles per gallon; the purchase price of gas at $3.80 a gallon, and the cost of midsized vehicles, insurance and financing.
Papandrew estimated that out-of-area trips would cost 60 cents a mile.
He put the “composite cost” of local and out-of-area trips at 75 cents a mile.
“The district presently has seven separate offices, which may need additional pool vehicles, thus additionally increasing the cost to the district,” Papandrew said in the report.
Papandrew, who was not at Monday’s meeting and whose report was presented to the commissioners by PUD General Manager Doug Nass, did not review mileage rates used by other governments or PUDs, according to the report.
“We’re kind of a little different in that we’re out here on the Olympic Peninsula,” Nass said in a later interview.
“Our territory is from one end to the other,” he said.
“Every PUD is different.”
George Caan, executive director of the state Public Utility Districts Association, said in an earlier interview that the organization does not keep track of the mileage reimbursement policies of its membership PUDs.
“I can’t say it’s unusual,” he said of the Clallam PUD’s policy.
From Jan. 1 through March 28, PUD employees and commissioners received $9,567 in mileage reimbursements, PUD spokesman Mike Howe said.
The PUD paid $62,076 for 79,078 miles travelled in 2012, according to the utility’s 2012 rate.
The reimbursements would have totaled $43,888 if the IRS rate had been used.
Ten employees, including the three elected commissioners, accounted for 66 percent of all travel.
Papandrew said in his report that he was unable to obtain details on how the IRS came up with its reimbursement rate.
He said the IRS rate is based on an independent study, the details of which he said are proprietary and not made available to the public.
“The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile,” the IRS says on its website, www.irs.gov.
Papandrew, the PUD’s former district auditor, who left in September, is returning to his former position at Clallam PUD on
He is currently employed as finance director of the Jefferson County PUD.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at firstname.lastname@example.org.