The Shreveport City Council finally decided the garbage fee issue on Tues.
By a 4-3 vote, a $7 per month fee was enacted. The fee becomes effective May 1. It will first appear on city water bills in June.
These moneys will be paid into a newly created sanitation enterprise fund. This was also passed on a 4-3 vote.
That means that the garbage fees will go into a segregated account. From that account all the expenses of the sanitation department will be paid from this account.
Thus, the garbage fee must pay salaries of workers, health insurance and other employee benefits, workers compensation insurance for these workers, fuel for the garbage trucks and all repairs and parts needed for the trucks.
The problem is that the enacted charge will not completely pay these costs.
The proponent of the enterprise fund Councilman John Nickelson acknowledged that a fee of $12 to $13 dollars was needed to make the sanitation
enterprise fund fiscally solvent. He acknowledged that the general fund would still need to subsidize the operations of the sanitation department.
Good government principles mandate that enterprise funds be fully funded. If not, the primary purpose of the fund is defeated—that being self-sufficiency. Thus the logic of such a fund is virtually self-defeated if it in underfunded.
Lets do some math.
The 2019 budget subsidizes the sanitation department with $8.5 million . That equates to a monthly subsidy of $708,333.
The garbage fee goes into effect May 1. It will first appear on water bills in June. Thus revenue from the fee can be expected from June through year end—7 months.
There are over 66,000 Shreveport water customers. Using that number, the fee should generate $462,000 per month.
That is a shortfall of $246,333 per month of expenses over income. But this does reduce the monthly general fund subsidy by $462 grand.
The city’s budget has projected expenses over income. The 2019 budget was “balanced” by the 2018 council utilizing over $6 million in accrued reserves .
This “savings” from a reduced sanitation department subsidy helps address this issue. But this approach, alone, is much like putting a band-aide on a gaping wound.
The garbage fee revenues will, in effect, offset the general fund subsidy of the sanitation department by approximately $3.23 million. This will still leave a potential year end deficit of $2.77 million.
Savings from unfilled city positions and possible sales tax revenue over and above budget estimates may provide budget stability. This does not bode well for pressing demands to increase the salaries of police and fire personnel.
The enterprise fund probably sends a mixed message to municipal bond companies that will rate the city’s financial status. Passing the fee is a positive, but the underfunded enterprise fund could be a negative.