The issue: Huntersville uses a waste service vendor
The town contracts with a private company to provide residential solid waste management services. The services performed by the contractor include once a week collection and disposal of household waste and as-needed collection of yard waste. The company also performs recycling pickup services every other week. The waste collection vendor provides these services to the 18,000-plus (and growing) households in the town. The town collects an annual solid waste management fee from the residential property owners – the fee is listed separately on property tax bills – and the town pays the firm for the town-wide service. These waste collection services are not offered to non-residential locations or apartment buildings or complexes. Those entities in Huntersville are required to handle or negotiate for their own solid waste collection services.
What happened: Expense always higher than fees
To help offset the cost of solid waste services, the town began charging a fee to residential property owners in 2007. The initial solid waste fee was $36 a year. According to statements made at a May 21 town board budget workshop by Interim Town Manager Jackie Huffman and Public Works Director and Town Engineer Max Buchanan, the fee never did – nor was intended to – generate revenue to cover all solid waste expenditures. “The fee does not cover half the cost of the service,” Buchanan told commissioners. The town pays the rest from its general fund account of savings and unassigned revenue. In 2008, the fee was increased to $54 a year and remained at that level until 2015. In 2015, the annual solid waste fee was raised to its current $72 per household rate.
What it means? Rate set based on percentage goal
The household solid waste fees have traditionally generated a certain percentage of the cost of the services, usually in a range near 40 percent. As the cost of the service increases – and it regularly does – and the fee stays the same, the percentage drops. For the coming budget year, the contractor has indicated the cost of collection and disposal services will rise by $213,079 to about $3.48 million. At $72 per household, the 2018-19 solid waste fees would generate around $1.297 million, or 37 percent of the cost. The total numbers are flexible because the number of households in Huntersville grows each month, but the fee-to-charges ratio remains the same. In response to commissioner inquiries at a previous budget workshop, Buchanan prepared a chart showing potential household solid waste fees that would generate a higher percentage of annual cost.
What's next: Board views options, sets tentative plan
Buchanan's chart of possible rate adjustments ranged from a $9 fee increase ($81 a year) that would generate an extra $162,000 a year, to a $99 rate that would generate an additional $486,000. Commissions also asked if property taxes could be used to pay solid waste charges (an approach many other towns use) which cued Huffman to explain one penny on the town's tax rate generates just over $600,000 in revenue so it would require a 2-cent rate increase to generate revenue similar to current solid waste fees. It would take about a 5-cent property tax increase to finance all solid waste services. Commissioners didn't pursue a tax rate, but did agree that a $12 annual increase (“just $1 a month,” Commissioner Danny Phillips said) sounded reasonable. The change will be in the budget the board reviews next month.