Shining a Light
As the Albany Common Council prepares to revisit a controversial landfill vote, the city’s new treasurer is getting together the numbers
Published on 4/29/2010 by Metroland written by Chet Hardin
The most recent push to expand the landfill stalled last month when the Common Council surprisingly voted against bonding for the next phase of the expansion. That ordinance failed due to a surprise voting bloc made up of veteran progressives and a majority of the council’s freshmen members. The council is expected to revisit that vote in May, once supporters of the bonding are certain that they have convinced at least one hold-out to flip-flop.
In the meantime, the council is pressing for ways to make the landfill more efficient, and more profitable. One way many members of the council have begun to promote is for the city to place the landfill in an enterprise fund.
It is an idea for which the city’s new treasurer, Kathy Sheehan, is an advocate. Her office, she said, is currently in the process of doing a full-cost accounting for the landfill—a necessary first step in establishing an enterprise fund.
James Wright, the executive director of the Development Authority of the North Country, said that operating a landfill under an enterprise fund, “is the only way to operate.”
At DANC, Wright oversees the operations of a landfill that services multiple counties.
“An enterprise fund is wholly contained,” Wright said, “so you know what your costs are and you know what your prices have to be. You want sufficient transparency, and you want to be competitive. And you want the rate-payers to understand value for their dollar.”
For years, critics of the Jennings administration in Albany have complained that the Rapp Road landfill, which is slated to be expanded yet again, has been operated without such transparency. They argue that this has made it easier to use the landfill as a cash cow to mask shortfalls in the city’s general fund.
Sheehan and her staff, she said, are working closely with the Department of General Services and its CFO. “We’re still in the information gathering stages, and we need to sit down once we have all the information and vet it.”
She said that she believes that her office will have full profit-loss statements and cash-flow statements prepared for the council soon.
An example of the complexity of the process can be found in trying to calculate landfill revenue. When the city sells landfill space to other governments, that revenue is noted under inter-governmental services. But when the city sells landfill space to Waste Management, she said, that revenue falls under departmental revenue. “So they are not even under the same budget category.”
It’s a complicated task, made harder by the fact that it’s the first time it’s been done for the city’s landfill. “But once we have it,” she said, “once we have agreed that we’ve got everything that is a cost or is a revenue item, and that we’re allocating it properly it will become much easier. Then we can have a debate. And I think that it will help DGS manage what it does at the landfill over the next seven years, if it is seven years, or two years, if it’s two years.”
Councilman Dominick Calsolaro, and others, have been arguing for years that the city needed to undertake a full analysis of the costs associated with the landfill, to gauge how profitable it actually is. The mayor is fond of stating that it brings in a revenue of well-more than $11 million. Sheehan has told the council that from that revenue, it is estimated that $4 to 5 million is profit.
However, as Calsolaro will argue, if the city were to associate all of the borrowing that is needed to pay for the landfill’s expansion—which includes bonding for the Pine Bush restoration—with the landfill’s costs, it wouldn’t be profitable.
Conti said that the city ought to move toward an enterprise fund “because there is going to come a time when you are going to have debt without the surplus revenue coming in.”
If the council passes the bonding ordinance, when the landfill is capped in roughly seven years, the debt will be an estimated $40 million. And there will be no more $11 million in revenue to buffer it. Ideally, everyone seems to agree, the city would use the landfill’s profits to pay down the debt load.
The other side of the issue, however, Conti pointed out, is this: Even though the city faces a massive debt burden somewhere down the line due to the landfill, the city’s operating budget is still very much dependent on the landfill’s revenues. Think of it as spending for necessitates with a credit card. The city budgets for that revenue.
“The thing with an enterprise fund, it limits what you use the money for,” pointed out Calsolaro. “The money that you are taking in is the money that you are going to be used to run the landfill, plus we’d have to put money aside for post-closure costs. And anything after that would go to the general fund. It would work like a business.”
With that money segregated out of the general fund, how does the city begin to wean itself off this revenue while it is facing an estimated operating deficit next year of $20 million? As Councilman John Rosenzweig asked, what services do people suggest the city cut?
“So that compounds it, when we are in a state of uncertainty,” Conti said. “Plus, I think that from the executive’s perspective, once money goes into an enterprise fund, that’s where it stays, and if you want to use some for general fund operating expenses, it gets more to difficult.”
Many of the council members question whether or not the tipping fee at the landfill needs to be raised, especially for the big haulers.
Councilman Mike O’Brien even suggested that perhaps Albany ought to reach out to Colonie, which also operates a landfill and is the city’s biggest local competitor, and say, “ ‘Hey guys, we’re working against each other here.’ It would be to their advantage—and ours—to just say, both of us raise our rates maybe $10 a ton.”