CLINTON — Facing a $1.6 million deficit in the solid waste fund, Clinton leaders are looking at the situation from all angles, debating an approach to best manage the debt.
The concern for Finance Director Anita Dalton is making sure a solution is in place before future bond ratings are negatively impacted, which could happen as soon as June 30 — the end of the Fiscal Year. One suggestion she had for the Clinton City Council during Tuesday’s Committee of the Whole meeting, is paying off the deficit with “one fell swoop” by borrowing money and adding it to the debt service levy.
Councilman Ed O’Neil did not see the benefit of utilizing that option.
“Do we really want to do the financial boo-boo of going out and borrowing money to pay debt service, that’s already got interest accumulated on it, with more debt service?” O’Neil questioned. “To go out and use a credit card to pay off a credit card, basically, is unacceptable. It’s a crazy way to do it.”
His suggestion instead was to look at what rate increases would need to be implemented to balance the deficit using only solid waste revenues, getting the fund to a self-sustaining level. While that wasn’t one of six scenarios Dalton had broken down for discussion during Tuesday’s meeting, it was the topic of discussion during an April 7 meeting — a proposal that called for significant rate increases over a two-year span.
According to the financial breakdown provided at that April 7 meeting, a more aggressive approach to settling the solid waste deficit would begin with the city’s current rate of $19.02. From there, the rate would increase by 8.53 percent each year to $20.64 in the second year, capping off in year three at $22.40.
That option would leave a remaining $161,952 deficit that Dalton expected would be cleared by the fourth year. What it doesn’t do, which left councilman John Rowland feeling disappointed, is remove the nearly 9,000 residents who do not utilize the city’s garbage collection service from the rate base.
“This thing was set up wrong to begin with. It was set up on the premise that they were going to bill everybody but not provide service to them,” Rowland said. “From the beginning this was a flawed plan; taking advantage of non-users and we’re still doing that. I don’t mind paying $20 a month, $5 a week; that’s cheap for the service the city provides, but we’re fooling people here with what we’re doing. This should have been, from the start, user-based and it’s not.”
One other aspect of Dalton’s presentation that left the council questioning its potential is the revenue numbers projected. According to Dalton, the revenue that would call for the three-year plan are based on a 100 percent collection rate from all 9,000 residents with the city services charge.
As the city has found out in recent years, planning for a 100 percent collection rate does not mean that will be the revenue generated.
In addition to a self-sustaining solid waste presentation, Dalton also included in Tuesday’s discussion the potential for three other options, each broken into a five-year scale and 10-year scale, for the council to consider.
Knowing the consideration and ensuing decision couldn’t be taken lightly, Mayor Mark Vulich suggested the council take time to decipher the breakdown of finances, looking at which options would be fiscally responsible; which would have the smallest impact on customers; and most importantly, which would keep the city’s rates in line with comparable communities offering similar services.
“Since there’s a lot to digest here maybe we need to have further discussion because I’m hearing a lot of different thoughts here,” Vulich said. “Sometimes when you have that knee-jerk reaction, you sometimes wish you wouldn’t have. This will give us enough time to look at all of this and to get some feedback from the public.”
The council will revisit the subject during the next Committee of the Whole meeting.
Assistant Editor Amy Kent can be contacted at firstname.lastname@example.org.