The city's trash authority will exhaust its savings within four years without raising customer rates or finding new revenue, finance officials warn.
The Tulsa Authority for the Recovery of Energy, which manages the city's curbside trash and recycling system, has begun drawing from its hefty surplus fund to compensate for revenue shortfalls in green and bulky waste programs that began with the launch of the new trash system in October.
The fund is on pace to run dry in fiscal year 2016-17.
"That means it's either a rate hike or we need to spend some time educating the community on how to recycle and how to utilize this new trash system ... and prevent those rate hikes in the future," said Cheryl Cohenour, chairwoman of the authority's board.
The authority contracts with hauling conglomerate NeWSolutions for trash and recycling pickup but uses its own crews for green and bulky waste collection.
The rates for the main service, which vary between $12.52 and $34.64 a month, have consistently met or slightly exceeded revenue projections, city finance official Alan Rowland said.
Drastic shortfalls in projections for the other two services have forced the authority to drain its surplus fund from a high of $13.3 million in fiscal year 2011 to $5.4 million in the coming fiscal year, he said.
"It's been slowly eaten up because the rates aren't covering the entire cost of the service," Rowland said.
Officials originally hoped to offset the $1.5 million annual cost of green waste collection by selling about $1 million worth of 50-cent stickers that customers must buy for bags of yard waste.
In practice, too many customers have opted to place green waste in their regular trash carts, rather than extra bags, trash officials said. The trash board's decision to offer three free months of green waste pickup late last year has also reduced revenue, Rowland said.
Officials now expect to make no more than $100,000 this year and $160,000 next year, he said.
The $5 fee for each bulky waste pickup is expected to come about $470,000 short of the $520,000 cost of that service, and revenue from the sale of recyclables has also fallen short of projections, he added.
"Because it's a brand new service, we had to estimate a lot of the (original) revenues because there was no history," he said.
Cohenour said her goal is to avoid raising service rates, but she added that "I do think we have to contemplate it with this being a new program and not knowing what kind of revenue is coming in."
Although the trash board never expected green and bulky waste revenue to meet expenses, the services were expected to break even in conjunction with revenue from regular trash collection and selling recyclables.
Rowland said he is unsure how much of a hike would be needed under current projections, but has said during trash board meetings that it could be large enough to warrant spreading the increase over several years to avoid burdening customers.
Cohenour said the board would first consider other revenue enhancements, such as selling mulch, and creating a true rainy-day reserve fund. Such measures hopefully would postpone or even negate the need for a rate hike - or at least lessen the severity of one, she said.
The board has not decided whether to offer free green waste pickup again this winter, and some board members have argued that doing so would worsen the situation.
"We're looking at anything and everything we can do to bring funds back to the program so that any potential rate hikes would be mitigated," Cohenour said.
The trash authority's surplus fund burgeoned in fiscal years 2006 and 2007 after the authority finished paying off debt associated with construction of the city's trash-to-energy plant, Rowland said.
When debt payments stopped, rates that had previously been hiked to compensate for the expense remained steady for a period, leading to generous surpluses, he said.
Trash authority surplus fund
| FY05 |
$43,000 |
| FY06 |
$8,018,000 |
| FY07 |
$12,482,000 |
| FY08 |
*$8,782,000 |
| FY09 |
$11,286,000 |
| FY10 |
$11,526,000 |
| FY11 |
$13,267,000 |
| FY12 |
$8,437,000 |
| FY13 estimated |
$6,278,000 |
| FY14 projected |
$5,394,000 |
*Used in 2007 for ice storm cleanup and reimbursed by federal aid
Zack Stoycoff 918-581-8486
zack.stoycoff@tulsaworld.com
Original Print Headline: City trash authority's surplus fund running dry
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