Item 6: Ordinance Concerning Solid Waste Powers

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Financial and/or Resource Considerations Garbage Hauler Surcharge – Nexus to Roads, Estimated Yields, Who Pays and How Much Nexus to Roads - The transportation surcharge would be assessed against solid waste haulers to better reflect the physical and financial impact that their operations impose on the city street system as a result of heavy hauler vehicles running on the majority of city streets every week. This surcharge would be assessed against solid waste haulers on the premise that heavy solid waste trucks cause significantly more damage to city streets than do other categories of lighter vehicles and run largely on local streets, which do not hold up as well under heavy vehicle use. The surcharge also represents fair compensation for private use of the right-of-way, a public asset that haulers rely on to deliver their services. Estimated Yields/Who Pays/How Much – At the level of a 5% fee, the transportation surcharge is projected to generate an estimated $900,000 for the fiscal year beginning July 1, 2009. A 5% surcharge applied to both commercial and residential garbage customers would result in slightly more than half of the new revenue projected to be generated from fees paid by commercial garbage customers. A 5% surcharge on the bill of a residential customer with a weekly 32-gallon service (the most common level of residential service) would increase the customer’s bill by 98 cents per month, or $11.76 annually. Commercial customers would see a proportionate 5% increase in their bills for garbage service. In its 2007 recommendation for a package of road funding solutions, the council committee noted the fact that “garbage services customers from all sectors would pay this fee, regardless of whether they were public, private or nonprofit entities,” thereby acknowledging that the intention was to spread the impact of this surcharge broadly across the community, so that everyone would pay a little towards the funding for a well-maintained street system. Attachment B illustrates the estimated financial impact of the proposed 5% garbage surcharge on a range of residential and commercial customers at various levels of service, along with a list of seven actual commercial customers and the estimated financial impact of the proposed surcharge on their monthly bills. Current Budget Outlook - Under the most current projections, the Road Fund is expected to generate a $2.3 million annual operating deficit this current year (FY09), and with no new revenues that annual deficit would grow to nearly $5 million in the out years of the six-year forecast. In the absence of deliberate action, the fund will deplete all available fund resources and become insolvent sometime in the fall of 2009. On the other hand, a set of $3.8 million ongoing revenue solutions implemented by July 1, 2009, would eliminate the projected future annual operating deficits throughout the forecast period and As an alternative, a minimum of $2.8 restore the fund balance to the policy-recommended level. million in one-time revenue would be needed for FY10 to fully fund the current operations of the Road Fund for one year, while council continues to work on a comprehensive, sustainable funding strategy. One-time Funding Strategy - Responding to council direction to bring back a one-time funding strategy to maintain street O&M services through FY10, the City Manager is proposing a three-part funding package as a FY10 stop-gap solution, comprised of the following three elements: Redirect up to $1.4 million of the FY10 local motor vehicle fuel tax revenue 1) from capital pavement preservation to critical street O&M services; Authorize a transfer from stormwater/wastewater reserves 2)by including in the final FY10 Adopted Budget, a one-time $500,000 contribution for FY10, from existing reserves in City-owned wastewater and stormwater utilities; and Impose a 5% transportation surcharge on solid waste haulers. 3) ? It is this third element of the City Manager’s stop-gap funding strategy to keep the Road Fund solvent through FY10 that is the subject of the council’s discussion and potential actions tonight. Z:\CMO\2009 Council Agendas\M090427\S0904276.doc