Getting a firm handle on costs is a challenge for any public works manager, but particularly for solid waste leaders in this era of lean-and-mean local government.
Elected officials tend to target solid waste because of perceived high labor, equipment, and capital costs, even though many communities allocate collection-and-disposal revenues to other municipal operations. That makes full cost accounting difficult and adds to agency overhead. As a result, many haven’t raised rates despite sharp hikes in fuel, maintenance, insurance, and employee health benefit expenses. Finally, the lack of reliable benchmarking data makes it difficult to rate agency performance.
Competition from the private sector remains intense, and politicians seeking ways to keep taxes and service costs low often make the threat of privatization. Given the current climate, a cost-of-service or rate study is more important than ever to focus attention on critical financial and management issues.
The analysis will demonstrate how much revenue from tipping fees, collection fees, and/or assessments a solid waste agency/department needs to provide those services. Eight basic steps ground the review in basic accounting and financial principles while ensuring that input from key stakeholders is obtained and addressed.
Think of the process as a pyramid with data-gathering forming the base and the remaining seven steps building on the results.
The situation at hand
Charlotte County was one of the first Florida communities to implement a special assessment to fund solid waste operations. The program has gone beyond disposal to include collection and recycling in the customer’s property tax assessment.
On average, the county’s 108-acre landfill takes in 170,000 tons per year from about 84,000 residential units and 300 business customers. The county’s remaining three-year term of its existing contract with its franchise hauler requires the Solid Waste Division to assess residential units within unincorporated areas and a few beach communities outside the district assessments for trash and recycling collection and disposal at the landfill. County leaders were concerned that they might have to dip into reserve funds to cover shortfalls in tipping fee revenues or collection assessments due to the continuing declines in waste tonnage and residential building caused by the Great Recession.
Here’s how the county allocates the $148.04 annual solid waste assessment:
Franchise curbside collection: $109.80
- Landfill operations (recycling, diversion, an illegal dumping task force, and household hazardous waste programs): $32.80
- Administration (tax collection and mailing notices): $5.44
The Solid Waste Division has six cost centers:
- capital improvements
- two customer drop-off centers
- illegal dumping prevention