It’s back to square one in the quest to find a stable source of funding for San Juan County’s struggling solid waste operation.

The proposed combination of a 40 percent increase in tipping fees, a $2 fee for recycling, and a $1,000 fee on newly developed parcels is no longer on the table.

Swayed by concerns raised by Public Works Director Jon Shannon, the County Council on Jan. 26 scuttled its own three-pronged financing proposal and agreed to look for a different solution that can keep the cash-strapped operation adequately funded and viable over the long haul.

County officials will head back to the drawing board Feb. 9. Meanwhile, the transfer stations on Orcas and San Juan islands will close on Fridays to reduce operating losses.

“I’m convinced a 40 percent increase in tipping fees is going to be a very, very big problem for us,” Shannon said. “It’s more of a gut feeling, but I think this type of tipping fee isn’t going to work in this economy.”

Tipping fees generate roughly 98 percent of the annual revenue that the solid waste division has historically used to pay for its daily operations as well as its investment in equipment, property and infrastructure. Its income has plummeted over the past 18 months as the amount of garbage collected countywide has fallen by roughly four million pounds.

“Our infrastructure cost and the service level we provide can’t be sustained on tipping fees alone,” Shannon added.

While a funding remedy remains elusive, things have gone from bad to worse for the cash-strapped solid waste operation. Shannon said that two solid waste employees will be laid off, one at each of the Orcas and San Juan facilities, as the division cuts its costs in response to the steady decline in the amount of trash collected countywide.

Roughly 45 percent less garbage was collected in the first three weeks of January than in the same period in 2009, he said.

Meanwhile, the council began eying the Beaverton Valley Road property as a potential source of funding for state-required improvements at the San Juan Island transfer station on Sutton Road, as well as its sister facility on Orcas. The solid waste division took on $800,000 of debt five years ago as part of the $1.8 million purchase of the Beaverton Valley Road site; the balance was split between the road fund and the equipment rental and revolving fund.

According to Shannon, solid waste could receive an infusion of roughly $220,000 in cash and be freed up to take on new debt if its financial obligation in the Beaverton Valley purchase is assumed by the equipment rental and revolving fund. That new debt could include a bond sale in which enough revenue would be generated to pay for some future infrastructure needs, as well as the possible purchase of the facility on Sutton Road, which the county leases from the Town of Friday Harbor for $10 a month.

Orcas, San Juan Island transfer stations will close on Fridays
The transfer stations on Orcas and San Juan islands will close on Fridays to reduce operating losses.

The county’s communications office issued this press release Jan. 27:

San Juan County Public Works Director Jon Shannon and Utilities Manager Ed Hale told the County Council Tuesday that the county’s solid waste utility will be making additional cutbacks to reduce operating losses.

In response to a question from Council Member Gene Knapp, Hale said the utility currently plans to reduce service days at its San Juan and Orcas Island transfer stations, and – pending community input – the utility hopes to move to “co-mingled” recycling service on Lopez Island.

Preliminary figures for 2009 show the utility’s revenues plummeted more than $700,000 below the budgeted amount, leaving capital and operating funds an estimated total of $684,000 in the red.

The cutbacks will close transfer stations on Orcas Island and San Juan Island on Fridays. Plans now call for the new schedule to begin on Friday, Feb. 19, though Hale said he was still conducting discussions with the utility’s largest customer, the Town of Friday Harbor. Service had already been reduced in 2009 by closing the stations on Saturdays. Hale estimates the utility will save $80,000 per year by being open just five days per week. Two solid waste utility employees received lay-off notifications Monday in anticipation of the reductions.

The Lopez Island solid waste facility has been the only site which has required recycling to be sorted by type of material. Hale anticipates that accepting “co-mingled” recycling will save the County a total of approximately $30,000 per year in transportation and recycling costs, plus it will allow more types of plastic to be recycled.

The County Council has conducted detailed discussions on options for changing the system of funding the solid waste utility at three of its recent meetings. The utility is now funded almost entirely by “tipping fees” charged by weight of solid waste received. A 40 percent drop in solid waste volume, blamed primarily on the construction downturn, hit the utility hard.

At Tuesday’s council meeting, Shannon said he fears that simply raising tipping fees to both make up for the shortfall and generate funds needed for capital improvements could send the utility into a “death spiral” with skyrocketing rates causing further reductions in volume until the operation is impossible to sustain.

Shannon told the council that operations and capital needs can be dealt with in the short run through service reductions and borrowing, so the council can have time to agree on a sustainable means of funding the utility. The utility faces financial challenges in the immediate future, needing to make expensive capital improvements to meet Department of Ecology standards and also to design and construct a replacement transfer station facility on San Juan Island.

Among the potential sources of additional revenue being discussed are real estate parcel fees, “gate fees” for haulers entering the stations, fees for recycling and “hook-up,” fees for new property development, and closing the gap between self-haul and commercial waste haulers.

After hearing Shannon’s report, the council postponed a Feb. 9 public hearing on what was expected to be a short-term funding solution, so that it can use the time to work on a comprehensive long-term funding plan.