OCEAN CITY – The idea of transforming the solid waste department into an enterprise fund or a franchise to reduce costs remains under consideration in Ocean City.
During last Friday’s budget wrap-up session, Public Works Director Hal Adkins presented the Mayor and City Council with a “full circle” of how the idea came about, starting in late February when the initial solid waste budget meeting was held on a staff level.
“At that time, there was some discussion at staff level about the thought process of creating a solid waste fee scenario for both residential and commercial,” Adkins said. “It was at that point the initial discussion of assigning the value to the FY14 Solid Waste Budget, which was roughly at that time $5.77 million, and about 7 cents to the tax rate, and we discussed a fee schedule that would allow that 7 cents to be returned to all property owners.”
At that time, staff felt $20 a month for residential collection and $30 per dump for commercial containers of eight cubic yards was fair and conservative in comparison to what independent trash collections charge.
“When you look at the amount of revenue that could be generated on behalf of a fee structure of that sort, it is substantial, but then through consultation with our City Solicitor [Guy Ayres] it was his stance from a legal perspective that generating that level of revenue in comparison to the actual cost of the system that would be entitled a garbage tax, he did not feel it was legally supportable, so that was the end of that scenario,” Adkins said.
Staff went on to discuss potentially creating a Request For Proposal (RFP) process where the town’s specifications for trash collection would be spelled out down to the specifics.
“Then go about bidding on this level of service ourselves in comparison to Waste Management and others that are in private business,” Adkins said. “One can imagine that a firm may end up bidding $10 or $12 million that would be my guess. We are currently doing it for $5.77 [million]. There is some legal room … where we could place our bid at and elevate revenues.”
The idea to create solid waste into an enterprise fund was also discussed with Ayres. According to Adkins, Ayres had reaffirmed an enterprise fund is supposed to break even.
“So why even discuss it,” Adkins said. “If it costs $5.77 [million], you’re going to have to charge $5.77 [million].”
Conversation eventually developed into the concept of the town only collecting residential trash and divesting from commercial collection.
“Most of you probably realize most municipalities’ only collect residential trash,” Adkins said. “We are in the commercial business because that is historically how the Mayor and City Council wanted it.”
Adkins reminded the Mayor and City Council solid waste operations has evolved going from collecting residential trash seven days a week to now two days and five days for commercial operations during the summer in order to decrease inefficiencies and operating costs.
The concern over divesting from commercial trash collection would be the formation of a dual tax dividing the tax rate between the residential and commercial realms. According to Adkins, Ayres advised a dual tax rate is not permissible but a single tax rate with a credit listed on a commercial bill would be plausible.
“I don’t know … what might be your reduction in tax revenue for commercial entities versus what your reduction in expenditure in the department would be,” Adkins said. “Meaning if we are not going to collect commercial, I could probably downsize the fleet. I could obviously reduce the number of full-time employees, but I don’t know how that reduction in expenses would rack up in the loss of revenue you would receive from those commercial entities that you gave a 7-cent tax credit on.”
Adkins furthered other impacts to consider is keeping Ocean City’s traditional goal of remaining “safe and clean.”
“One could question whether the business owner, who would then be faced with collection fees from private enterprise and realize the expense there, may all of a sudden decide they don’t want five-day-a-week collection, now they want four-day-a-week collection, or three-day-a-week collection … you would have to be extremely stringent and somehow regulate the number of collections they would be required to have to maintain the level of cleanliness that you have historically achieved and by doing so you are basically dictating what that commercial entity has to pay to the waste management,” Adkins said.
Council President Lloyd Martin felt the discussion was too extensive to make any kind of decision during the budget wrap-up session.
“The figures are staggering,” he said. “I know that the trash fee is another tax and I know that is something I want to look at. I know people are used to getting something for free or built into their tax bill, they don’t want to see another bill put out there. Is there another way to become equitable? I think we can look at that.”