City and Kansas University leaders are reviewing two proposals from bus companies interested in operating both the city and university’s bus systems.

Cliff Galante, public transit administrator for the city, confirmed that MV Transportation – the current city and university operator – and First Transit – the company that provides school bus service to the Lawrence school district – have submitted proposals.

Galante declined to release details from the proposals, but he said it is clear the city will not receive nearly as good a deal on diesel fuel from either provider as it currently does.

“I can tell you this much,” Galante said. “Our costs are definitely going up.”

Galante said he hopes he and his KU counterparts will be able to make a recommendation on a provider within the next one to two months so that city commissioners can consider it as part of their 2009 budget deliberations. Those deliberations will begin this summer.

The cost to continue operating the city’s public transit service is expected to be one of the larger issues facing the city. City staff members have braced commissioners for a significant increase in public transit costs, in part because of the fuel issue and also because the city’s bus fleet is in need of replacement.

The city’s current contract, which expires at the end of 2008, has a provision that caps how much the city will pay for diesel fuel at $1.62 per gallon. Galante said the proposed contracts come nowhere close to providing that type of fuel break for the city. The bus system uses about 170,000 gallons of fuel per year.

Commissioners have stopped short of saying they can support more money for public transit. Instead, commissioners asked any company submitting a proposal to provide prices for two reduced-service scenarios. Commissioners said they wanted to see prices based on keeping the T service at status quo levels, one cutting service by 30 percent and the other cutting service by 50 percent.

Danny Kaiser, assistant director of parking and transit for KU, said university leaders are keeping a close eye on the commission’s attitude toward transit.

Both KU and city leaders have been interested in working on a system that would coordinate routes, fares and other systems between the T and the university bus system. Kaiser said many efficiencies and some cost savings could be gained by having better coordinated systems.

“But the benefits of doing what we’re trying to do diminish quite a bit if the other party starts reducing service,” Kaiser said.