Administration - Joe Huss, Finance Director/Asst. City Manager
Title
Title
Adopt 2022 Sanitation Fund Budget
end
Executive Summary
Pursuant to requirements to adopt annual budgets for all operating funds, Staff is bringing forward the proposed 2022 Sanitation Fund Budget for Council consideration and adoption.
Background
Council reviewed the proposed 2022 Sanitation Utility Fund Budget at the November 1, 2021 Workshop. At the Workshop, Council provided direction to bring forward for adoption the budget as presented on that date.
The Sanitation Fund accounts for the city’s refuse and recycling program. Walters Recycling and Refuse, Inc. provides refuse collection and recycling services for all Blaine residents. The current contract term, which was extended in 2019, is from January 1, 2016 through June 30, 2024.
Revenues
Over 96% of the revenue required to operate the Sanitation fund comes from charges for trash and recycling services. The quarterly rate charged to households will increase by $1.50 ($0.50/month) for all container sizes in budget year 2022. This increase is a result of increases in expenses as described below, the assumption that these increases will continue into the future, and the lack of credits received from recycling commodities. This is consistent with the five-year budget plan presented to Council last year. The proposed budget will result in a projected $128,400 increase in fund reserves in 2022. A healthy fund reserve is particularly important in this operation, considering the relative volatility of the market.
Expenditures
The proposed budget for 2022 and the accompanying five-year plan shows a healthy position associated with the business of waste collection and disposal. The terms of the new contract with Walters directs that the basic monthly waste and recycling collection charges per household will increase by 39 cents. This increase, combined with the expectation that the customer base will increase by 250 households, results in an increase in budgeted expenses of $178,560 over 2021 projections.
Because of the closure of the Great River Energy facility, collected waste continues to be hauled to a landfill for disposal. Tipping fees at the landfill are expected to increase $1.75 per ton. As a result, waste disposal expenses are budgeted to increase $74,000. The more volatile point in the model is in how recyclable material will be disposed, and how much it will cost. The 2021 model assumed a per ton commodity fee of $37.60, however Walters has been able to remarket curbside recyclables resulting in an average net year-to-date revenue of $16.06 per ton. The updated model assumes a net zero rate of expenditures per ton for recyclables in 2022. The attached budget document proposes 2022 budgeted expenses of $4.8 million; a $126,000 increase over the 2021 budget.
Five-Year Outlook
The attached five-year model continues the increase in customer fees in 2023 through FY 2026 in order to maintain a healthy fund balance. The model shows an annual increase of $1.50 in 2023 through 2025, and a $2.25 increase in 2026. Utility bills are issued quarterly. While the year-end fund balance remains healthy throughout the model, the actual cash/investment balance is nearly zero. In order to cover the true cost of waste and recyclables disposal, as well as restoring the fund’s cash position, staff is recommending the following schedule of fee adjustments built into the five-year model:
|
Service |
2021 |
2022 |
|
32 Gallon |
$39.00/QTR |
$40.50/QTR |
|
64 Gallon |
$49.50/QTR |
$51.00/QTR |
|
96 Gallon |
$63.00/QTR |
$64.50/QTR |
Strategic Plan Relationship
Adoption of annual budgets contributes to the overall financial stability of the City.
Board/Commission Review
N/A
Financial Impact
The proposed budget, if adopted, will increase the quarterly rate for all refuse container sizes by $1.50 and will result in $4,929,600 in projected revenues and a $128,400 increase in projected fund balance.
Public Outreach/Input
N/A
Staff Recommendation
Approve the 2022 Sanitation Fund Budget through the adoption of the following resolution.
Attachment List
N/A
Body
WHEREAS, the proposed Sanitation Utility Enterprise Fund Budget for the fiscal year commencing January 1, 2022 has been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Sanitation Utility Enterprise Fund Budget; and
WHEREAS, the City Council has, after due consideration and deliberation, made such amendments and adjustments in the proposed Sanitation Utility Enterprise Fund Budget as they consider necessary, desirable, or expedient.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine as follows:
1. That the proposed Budget for the Sanitation Utility Fund attached hereto is approved.
2. That the 2022 appropriations attached hereto are approved.
3. That the 2022 funding sources and fee adjustments identified and attached hereto and reflected in the City’s fee schedule are approved.
That the City Manager is authorized and directed to implement and to administer, within the budgetary funding limits and within adopted City policy and relevant State and City laws and regulations, said approved Sanitation Utility Enterprise Fund Budget.
PASSED by the City Council of the City of Blaine on this 15th day of November, 2021.