Summary
To: Town Commission
From: Ashley L. A. Bernal
Date: 8/3/2021
______________________________________________________________________
Subject: Proposal of Solid Waste Rate Increase
Summary: In preparation for the upcoming budget year, staff has completed analyses on revenues and expenditures. Within these analyses, it became apparent that the Solid Waste fund has carried a deficit of around $125,000, which has been filled over time utilizing operational savings, reductions in fleet size, staff size and use of reserve. At this time, staff is seeking to have discussion of strategies to close this deficit, as there is currently $101,800 differential between revenues and expenditures. The chart below illustrates the continuing differential if you strip away reserves and amounts for capital equipment.
|
Year |
Revenue (Less Reserve) |
Expense |
Difference |
|
2017 |
$839,900 |
$954,300 |
($114,400) |
|
2018 |
$869,000 |
$1,224,853 |
($355,853) |
|
2019 |
$815,111 |
$941,650 |
($126,539) |
|
2020 |
$881,850 |
$1,005,550 |
($123,700) |
|
2021 |
$922,168 |
$1,047,318 |
($125,150) |
Previous Commission Action: Amending Ordinance 526 for a 5% increase in Solid Waste rates in 2019.
Background/Problem Discussion: Staff has identified several strategies to close the gap. Essentially, the options are backfill with reserve, institute a rate adjustment, or eliminate recycling, or a combination of any of the three prior options. The first option is to continue subsidizing the deficit with reserves, a solution which is extremely temporary, but the fund does enjoy significant operating reserve (Greater than $800,000 unaudited) inclusive of amounts held for current vehicle replacement.
Second, the town can immediately raise the rate by about 14%, which is reflective of the gap or pursue a stair step approach, which is common in other cities. In the event of a multi-year increase approach in, there are multiple options to choose from. Attached to this item is a breakdown of estimated revenues and expenditures based on each of these options.
|
Proposed Rates |
4% |
5% |
6% |
7% |
14% |
|
Current Rate: $36.85 |
$38.32 |
$38.69 |
$39.06 |
$39.43 |
$42.01 |
|
Monthly Increase |
$1.47 |
$1.84 |
$2.21 |
$2.58 |
$5.16 |
|
Yearly Increase |
$17.69 |
$22.11 |
$26.53 |
$30.95 |
$61.91 |
Additionally, there is the option to discontinue recycling, which aligns with the cost of the deficit. The removal of this program would result in savings of around $128,000 based on current year budget expenditures. This number is likely to increase in the coming year. On the other hand, the removal of this program would generate an extra 455 tons of refuse to collect, which equates to an additional $19,200 of disposal costs, for a net savings of $108,800.
Financial Implications: A table of municipalities and their current rates have been included. It should be noted that the municipalities with proposed increases are planning to increase by their respective percentage each year for the next three to four years, depending on the municipality.
|
Municipality |
Rate |
Proposed Increase |
|
Clearwater |
$31.00 |
4% |
|
Largo |
$21.18 |
10% |
|
St. Petersburg |
$25.47 |
4% |
|
Treasure Island |
$15.81 |
|
|
Safety Harbor |
$28.20 |
6% |
|
Indian Rocks Beach |
$20.27 |
|
|
Oldsmar |
$20.00 |
|
|
Redington Shores |
$14.67 |
|
Recommendation: Finance Board recommended an immediate 14% increase upon initial conversation, but will be discussing the item in August
Proposed Motion: No proposed motion, this item is for discussion. If a rate increase is considered, town would send out a mailer to all customers for a public hearing regarding the rate increase.