Council to Discuss Increased Costs for Residential Recycling
Resolution will allow City to Advertise for Bids for Residential Recycling
According to information from the City Administration, the City’s current residential recycling contract with Rumpke will end this May and the city is asking the council to adopt an emergency resolution to advertise for bids for a new residential recycling contract.
With the new contract, the city is expecting recycling rates to increase drastically. Currently, the recycling contract costs the city $425,000 per year. The city is anticipating the new annual cost for recycling to jump to $535,000 per year, an increase of over 25%. The new contract will be advertised for three years with two additional one-year options, if agreed upon by both the city and the vendor.
Currently, most residents pay $17.50 per month in their utility bills for the trash and recycling services; some residents pay $22.50, if they have a 96-gallon recycling tote. The $17.50 charge was last changed in October 2022.
These fees are expected to generate $1.802 million in revenue for the city this year, which is expected to help cover the $1.817 million cost in the refuse and recycling account this year.
At this point, you may be wondering how a fund can work if the expenses are outpacing revenues. Well, trash and recycling is handled a bit differently than the other utility services.
On your monthly utility bill you basically pay for four separate services; water, waste water, storm water and trash. The funds from three of the services are placed in their own “enterprise” fund, those would be water, waste water and storm water.
The dollars in these “enterprise” funds aren’t intermingled with other dollars in other funds. By the same token, dollars in the these funds can only be used for the purposes for which the dollars are raised. For example, only dollars collected for water can only be used for water service; dollars collected for storm water and can only be used for storm water improvements.
Trash and recycling in Troy is treated differently. When you pay a utility bill, the dollars for trash and recycling aren’t put in an enterprise fund for those purposes, but they are put in the general fund, along with all the other funds the city collects for the multitude of other services the city provides (such as fire, police, etc.). And as a result, the general fund pays for the trash and recycling costs.
The chart below shows how the costs in the 2024 Budget for Refuse Collection are broken out. Unlike most government funds where personnel costs are the major drivers, the largest costs in refuse collection are for services, namely the Recycling Contract (budgeted for $535,000) and Transfer Station Fees ($480,000).
The big question remains, will fees need to be increased to increase the cost of the service? Well, if these funds were stand-alone enterprise funds, the answer would unfortunately be yes. Running a structural deficit isn’t unheard of in enterprise funds, but only if there is a healthy fund balance to support the shortfall of revenue. However, these situations are usually followed up by large fee increases.
But, trash and recycling is handled by the general fund and the general fund also subsidizes services that don’t always generate enough revenue to cover expenses. The city swimming pool will get a subsidy of $300,000 this year, while Hobart Arena and the Miami Shores Golf Course are both scheduled to get a subsidy of $250,000. It’s also interesting to note that in the 2024 budget, the city is expecting to have a carry over in the general fund of $34.6 Million by January 1, 2025.
City Council will review this resolution and other items of business at their next meeting, which will be Monday, April 15th at 7:00 p.m. at the City Building.
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What are the per ton costs for each of trash and recycling?