Council trashes garbage fee

Superior’s City Council denied a proposal to retain the city’s garbage service for a fee.

However, that didn’t solve a serious financial problem the city is facing to manage its $6.3 million operation that includes the collection system and landfill.

The landfill enterprise fund is facing more than $1 million deficit in 2016. A $9.75 cent fee proposed to fill the gap and turn around the high cost operation - second only to the police department - would have given the city $1.17 million to stop the financial bleeding that could leave the city with an almost $7.3 million deficit by 2023 if nothing is done.

"None of us like additional fees, or new fees, but this one is definitely needed," said Councilor Dennis Dalbec. "We are able to control our costs of our landfill. If we end up trying to sell this, we have uncontrolled costs in the private sector. ... This is a no-brainer decision. We need to invoke a $9.75 fee."

From taxes to fees

Superior city officials have traditionally handled the gap in revenue and expenses in its landfill fund with a transfer from the general fund.

In recent years, the annual cost ranged from $850,000 to $1 million.

At $1 million, the average cost for trash service per household was $8.34 per month, said Jean Vito, finance director and senior administrative officer.

However, costs for operating the landfill are rising and the city’s ability to generate revenue are limited. With state-imposed limits on tax levy increases for nearly a decade and reductions in state shared revenue, the city can no longer afford to make the transfer without cutting "bare bones" departments in the city, Mayor Bruce Hagen said.

This year, the city could only transfer $500,000 to the ailing landfill enterprise fund, leaving the fund with $801,575 more in expenses than revenue would cover. Next year, with no planned transfer to the fund, that would result in a shortfall of more than $1.1 million.

"Core services will be reduced if we stay on the trajectory we’re on," Hagen said. "Draconian decisions will have to be made for the major core functions (police, fire and public works) of the city."

Hagen said while the garbage service is among the most appreciated and very efficiently run, it's issues beyond the city’s control - environmental regulations and tipping fees that cost the city about $1.7 million annually - that have created the financial crisis.

After years of work on the issue with experts in landfills "we’ve come to the conclusion that $9.75 is the right number and that retaining the service and not privatizing is the right direction to go," Vito said.

"We got the rate down to the bare minimum, which is $9.75," Hagen said.

Two years ago, the Council considered a $20 fee, but dropped the matter because of prohibitions written into the 2013-2015 state budget that have since been eliminated by the state.

Less costly options?

Councilor Dan Olson recommended retaining the city landfill and garbage service but charging a more modest fee. He recommended residents pay $7.75 per month instead of $9.75.

However, city projections showed that the fund would continue to have a deficit for three years and would not have allowed for a reserve fund to manage emergencies or the 40 years of monitoring required by law after the landfill closes. Hagen said those costs would be about $150,000 annually.

With plans to close the city landfill when the current cell runs out of airspace in 2022, Olson said "I have a logical reason for what I am proposing. … What I’ve done first is a little simple math - $7.75 a month is $93 dollars a year. He said that translates to a cost of $1.79 for every week of the year the trash is picked up and would generate $930,000 annually, wiping out the city’s subsidy to the landfill fund and allowing the city to break even.

"I don’t believe that we should be on the front end charging more money than we need," Olson said. He said his goal is to do the best the city could for the people who will be at the mercy of private haulers when the city’s landfill closes in 2022.

However, several councilors said the move would be fiscally irresponsible because it would maintain deficits and leave the landfill fund without a reserve.

Only Olson, and Councilors Denise McDonald and Graham Garfield supported a measure that would have reduced the fee to $7.75.

Garfield suggested a sliding scale fee that would have reduced the cost for low-income and elderly people eligible for other low-income programs. However, that measure went nowhere.

Dennis Dalbec said utility companies don’t charge lower fees for the poor and the landfill is a utility.

Councilor Esther Dalbec said she wouldn’t support any fee for garbage service because people in her district are already struggling to make ends meet. She reiterated her stance Wednesday and said her vote wouldn’t change.

Councilors Olson, McDonald, Garfield, Esther Dalbec, Warren Bender and Mike Herrick voted against the $9.75 fee.

Councilors Jack Sweeney, Dennis Dalbec, Tom Fennessey and Bob Finsland voted to retain the city service at $9.75 because it was the "fiscally responsible" way to manage the financial troubles facing the landfill enterprise fund, and it’s the least costly option to retain the level of service citizens receive now.

Services include picking up multiple cans weekly, and additional services like special pickups for brush and spring cleaning, hazardous waste services and free landfill days. The added services would be lost if the service is privatized.

"I think we’ve done our due diligence getting it down to a minimum, down to a bare basic," said Fennessey, who served on an internal review panel that worked on the issue. He said everyone would be "up in arms" if the city simply privatized the service.

Privatization

After the Council defeated measures to invoke a garbage fee Tuesday, Hagen on Wednesday announced plans to hold a special session of the Council next week to hear a presentation from Waste Management. The company submitted the only proposal to privatize the service the Council didn’t reject.

Under Waste Management’s proposal, city residents would pay $11.25 per can per month for the size cans the city uses now with a 10-year contract. Additional cans would cost more, $6.25 for the second, and $6.85 for the third and fourth cans used by commercial operations only. People would have the option to reduce costs with a smaller cart. A 64-gallon can is $10.40 per can per month and $9.25 for a 32-gallon can. Seniors age 62 and older could get a 32-gallon can collected for $8.05 per can per month. And residents could change their trash can size once at no cost, but a $10 fee would be charged for subsequent changes.

The costs rise for all levels of service if the contract is less than 10 years - $11.85 per can under a seven-year contract and $12.15 per can under a five-year contract for the size can the city uses today.

Hagen said the city simply doesn’t have the system in place to offer smaller cans.

What’s next

Hagen plans to call a special session Tuesday. He said the city needs a solution before the Council considers the city’s 2016 budget starting early next month.

"It’s of extreme importance to the city taxpayers for the budget formulation and the fact that there will be deficits," Hagen said.

Vito said the Council’s decision to deny a fee Tuesday night created a hole of more than $700,000 in the city’s general fund budget. Without additional revenue, that means cuts.

"I don’t believe that taking from the general fund at the expense of core services is the solution," Hagen said. "… We need new revenue streams or we can’t survive."

Hagen said he hopes the administration and Council can have a solid discussion and come up with solutions.

"It’s a serious issue and we need to resolve it," Hagen said.