Item 6: Ordinance Concerning Solid Waste Powers

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important choices, which will decide whether or not the city continues to deliver traditional street operations and maintenance services in the upcoming fiscal year. The city’s General Fund is also facing substantial financial challenges in the form of a projected $12 million budget shortfall for FY10, which will require significant changes in the way the city delivers traditional General Fund services, as well. It is unlikely that the General Fund will be in a position to offer even one-time financial assistance to the Road Fund, let alone contemplate being part of a long- term, sustainable funding solution for transportation system service needs. Compile a List of New Fees and Taxes from All Levels of Local Government A memo will be provided to council under separate cover responding to the question that was asked as to what other new fees and charges may be approved by the state and county governments that might have an impact on Eugene residents. Impact on Hauler Revenue from Most Recent Rate Increases In September 2007, the garbage haulers implemented a rate increase for which the primary driver was an increase in county disposal fees. This action resulted in an approximate $1.10 per month increase for a 32-gallon weekly customer (about the same as the projected impact of this proposed transportation surcharge). Shortly thereafter, a 4.4% rate adjustment was implemented in December 2007 as a result of the financial review to maintain the guaranteed profit ratio for the haulers; this increase added about 90 cents per month for the 32-gallon weekly customer. Anecdotally, between September 2007 and February 2008, Lane Apex, which serves about 13% of residential customers in the city, experienced just over $2,600 per month decline in residential customer revenues, equating to an estimated $32,000 in annual revenue loss. While the total number of Lane Apex customers did not change significantly, the movement of customers from one class of service to another accounted for the decrease in revenue. The experience of other haulers was similar during this period. City staff are in the process of conducting another financial review of the hauler rates which may result in a request for a future rate adjustment to maintain the guaranteed profit ratio. Concern about Financial Impact on School Districts Concern has been expressed about the financial impact of the proposed surcharge on garbage fees charged to local school districts, which are struggling with financial challenges of their own. At the level of a 5% surcharge, 4J School District would pay an estimated $1,100 more per month in increased garbage fees, and hauler testimony indicated that Bethel School District would pay approximately $450 more per month in increased fees. The primary concern is that a possible effect of the new surcharge would be to reduce available funding for delivery of K-12 education services in the city. While it is critical that the community address transportation funding needs, K-12 educational services are also of vital importance. The council may wish to consider a mechanism to offset or mitigate impacts of the proposed surcharge to school districts while at the same time preserving the integrity of the garbage hauler surcharge as a legally defensible funding source. Council should be aware that a waiver or exemption of the surcharge on the revenue derived from public school districts may undermine the integrity and legal defensibility of the surcharge. A more appropriate mechanism for mitigating the impact on public schools would be to develop some options to offset or reduce the impact of the surcharge on schools using another funding source. Establishing a funding source that would wholly offset school transportation surcharge impacts is estimated to require around $19,000 annually. This special appropriation could be established in the annual budget process. This motion should be made only after the ordinance is adopted. Potential Amendment 2: Move to direct the city manager to bring back options in the FY10 Budget Committee discussions for funding a Solid Waste Hauler Surcharge offset to reduce or eliminate the impact of the 5% transportation surcharge on public school districts in Eugene.