What's at stake?
Trash rates haven’t gone up since 2009 in Fresno. City officials say a rate hike is necessary to plug holes in a budget deficit, fueled by increases in labor costs, landfill tipping fees, and a new planned headquarters for the public utilities department.
Fresno’s trash ratepayers better buckle up: the city council initiated the process to raise trash rates on the city’s residential customers at their meeting on Dec. 14.
The process initiation was passed 5-2, with Councilmembers Miguel Arias and Luis Chavez opposing.
For the city’s 119,000 residential customers, the proposal will increase garbage collection rates by roughly $20 per month across the next five years, according to a report prepared for the city by HF&F Consultants, LLC.
Why is the city trying to raise trash rates?
The city began to alert the public about the solid waste division’s financial troubles when the mayor’s budget was released in May, revealing a $12 million deficit.
“We’ve done everything we can to live within our means and we have drained the bank dry,” said Brock D. Buche, director of the Department of Public Utilities, during a June 8 budget hearing.
During the Dec. 14 Fresno City Council meeting, Buche confirmed that the SWMD has been kept afloat by their reserve funding for the past five years. He also shared that, to finish the 2023 fiscal year “financially sound,” they will be taking out a $5 million loan from the Wastewater Management Division.
With the rate increase, the SWMD expects to build $1 million in reserves each year.
Buche gave a presentation on Dec. 6 at Sunnyside High School outlining the SWMD’s financial health.
Using the 2012 fiscal year as a benchmark, Buche outlined the six major increases in operating costs compared to costs in 2023: landfill tipping fees, fuel, labor, vehicles, fleet maintenance and collection cart purchases.
- Landfill tipping fees in FY 2012 were $6,511,682. In 2023 they were $7,367,703, a 13% increase. The city dumps residential landfill waste at the American Avenue Landfill south of Kerman, operated by Fresno County, after passing through the Cedar Avenue Recycling and Transfer station in south central Fresno, owned by Caglia Environmental. Green and organic waste is split between Kochergen Farms Composting in Kettleman City and West Coast Waste near Malaga.
- Fuel in FY 2012 was $926,896. In 2023 the cost was $1,586,400, a 71% increase.
- Labor in FY 2012 was $11,557,642. In 2023 the cost was $14,150,900, a 22% increase. In June, the Fresno City Council approved wage increases for members of the city’s Local 39 union, which includes employees of the SWMD.
- Replacing collection trucks in FY 2012 cost $261,500. In 2023 the cost was $595,700, a 127% increase. Additionally, replacement pick-up trucks in FY 2012 cost $32,305. In 2023 the cost was $51,100, a 58% increase.
- Fleet maintenance costs in FY 2012 were $4,289,413, In 2023 the cost was $7,075,308, an increase of around 65%.
- Collection cart purchases in FY 2012 were $741,360. In 2023 the cost was $954,850, a 29% increase.
According to Buche, 25% of the vehicle fleet are operating over the expected eight-year service life. For the 2023 fiscal year, the SWMD did not have the funds to replace the vehicles.
Landfill gas leaks, headquarters expansion, state composting law also drive up expenses
The city’s Department of Public Utilities also purchased the former Fresno Bee building on E Street in 2021 to consolidate all of the department’s divisions into a single facility. The ratepayer portion of costs for that building are estimated at $5.58 million. They estimate that even by conservative calculations, that won’t be enough to cover the capital costs of renovating the site to meet the department’s needs, and project that more costs of expansion will be included in the next rate update.
Moreover, the city anticipates increases in labor and inflationary costs needed to maintain contamination prevention efforts from closed landfills – including the Fresno Sanitary Landfill in southwest Fresno, a designated National Historic Landmark.
The city received a letter from the U.S. Environmental Protection Agency earlier this year, according to City Manager Georgeanne White who said during budget hearings that the city is behind schedule in the remediation process.
In 1989, the EPA designated the site as a Superfund, requiring extensive remediation efforts to prevent further migration of methane gasses into nearby residential groundwater supply wells. About $2.5 million is being allocated in the 2024 fiscal year budget to treat the groundwater affected by the waste and the gasses exuding from the landfill as part of this decades-long remediation program, which is anticipated to be completed in 2025.
The city also expects an increase in costs to implement a new state law – SB 1383 – that requires residential composting of food scraps to reduce methane emissions from landfills.
When was the last time that trash rates went up?
The last solid waste rate increase was in 2009, after a series of rate changes was approved in 2007. The city says that they have used funds from the SWMD’s operating reserve to keep trash rates stable in the meantime.
The city’s now-defunct Utilities Advisory Commission recommended a rate increase in 2011 – but it was never approved by the council, in the middle of a deep economic recession.
Amid a staggering budget deficit, the city council voted in 2012 to first privatize commercial trash collection, then residential trash collection, to cut city costs and stave off rate increases. After outcry from Local 39, the city employee union representing utilities employees, who would have faced job cuts from the measure, got the decision to the ballot, via Measure G, where 50.73% of voters said they did not want to privatize trash collection.
Currently, franchise fees between the SWMD and commercial private trash contractors go to the general fund of the city and not the SWMD.
Will services change under the proposed rate increase?
The city is not proposing any significant changes to current service. Operation Clean Up will remain in place. The city is also proposing to add one bulky curbside collection per year on an appointment basis, beginning in July 2026.
Councilmember Arias expressed his desire for the SWMD to bring trash compactors to the city, as well as better services to public trash can collection. He also wants the SWMD to change its policy on stolen garbage cans.
Currently, if a customer has their garbage cans stolen, the SWMD will replace them at no charge. Arias urged Buche on Thursday to change the policy to increase revenue. City Manager White said that Arias’ desired policies are not possible under the current rate increase proposal.
Will there be an opportunity to provide community input before rates increase?
In November, Fresno’s Solid Waste Management Division (SWMD) held four meetings across the city to discuss an increase in its monthly rates.
The city also has a consulting contract with JP Marketing for $384,548 to mail notices to residents and conduct additional outreach on the rate increases, should the council vote to initiate the process.
What does the process look like to raise rates?
Under California’s Proposition 218 law, the city cannot move forward to raise rates without the consent of ratepayers first.
Following the city’s initiation of the Prop. 218 process on Dec. 14, customers will receive a notice and a protest ballot in the mail no later than March 18, 2024.
Afterwards, a public hearing will be held May 2, which is also the final protest deadline. If customers approve the rate increase, the new rates would go into effect July 1. If a majority of the city’s 119,000 residential customers send in protest ballots, the rates will not increase.
What will happen if residents don’t approve the rate increases?
Two options were outlined by Buche if a rate increase was denied by voters: cost cutting measures that would affect the SWMD’s services, or borrowing money from the city’s general fund, which would affect other city services.
Will there be any credits for people who cannot afford Fresno trash rate increases?
Currently, residents 62 years of age and older are eligible for a 14% discount on their trash rate. (An application for this program can be found here.)
However, the consultants have recommended to the city that they replace the senior discount with an affordability credit for low-income utility customers. A more detailed plan on this credit will be presented to the city council in 2025, according to the city’s staff report.
