Rhino’s Ramblings - Budget Breakout Trash Talking Franchise Fees
A look at the impact of the proposed increase in tipping fees at the Moose Jaw landfill included in the 2024 City budget
By Robert Thomas - Opinion/Commentary
With Council set to start work on the City’s annual operating budget before the end of the year MJ Independent has decided to focus on a couple of issues we have been asked about by our readers.
The first area we have decided to focus upon is the touchy area of garbage.
This time around it is NOT going to be a re-introduction of plans to move to curbside residential pickup. My guess is Administration trying that twice in the past they’ve learnt their lesson - FOR NOW.
But rather MJ Independent is focusing upon plans to increase commercial garbage fees and the impact that will have on local business. We are doing so after a couple of local businesses approached us with their concerns.
The concern is encapsulated below:
“Did you know the City is increasing garbage fees and then they’re taking the money and spending it elsewhere. You need to do an FOI (Freedom Of Information) request and expose this.”
Now here is the simple answer - yes I did.
The City has been charging a franchise fee - skimming in the minds of some - for years from their three utilities water, waste water and solid waste for years.
It’s a long standing practice - albeit one that is paid little attention to.
And yes this could easily be described as a case of where Peter is annually robbed making his way down the gravelled bumpy Caribou Street East to give to Paul to pay for something else other than the Solid Waste Utility.
The shortfall - if you want to call it that - created in such things as commissioning a new landfill, decommissioning the landfill and landfill operation was in my opinion made up by removing trash collection from property taxation to a monthly fee.
This was all done in the tenure of Matt Noble as city manager.
Additionally it can be argued part of commercial fee increases have gone to making up this shortfall.
To help get to the bottom of this trash heap - we took out a Freedom Of Information (FOI) request to help keep our readers informed.
Question - Why is there a need to increase commercial rates to the sanitary landfill?
At their September 11, 2023 meeting finance director Brian Acker - while briefly introducing the proposed 2024 Operating Budget stated there was a need to increase tipping fees at the landfill.
The stated reason Moose Jaw’s rates need to increase is because they need to increase to keep other jurisdictions’ trash out of the landfill.
The apparent need to keep other places trash out of Moose Jaw’s landfill is the limited capacity which was backed up when MJ Independent asked Mayor Clive Tolley about it during that meeting’s presser.
The narrative that rates need to go up to keep out non-local garbage was brought up by Budget Committee in January 2018.
“Last year, the rate was increased to $60 per tonne to recover costs, as well as to keep commercial waste from being trucked from Saskatoon to Moose Jaw, the Budget Committee was told in a previous day long meeting.”
Yes there is in fact a long standing policy to increase Moose Jaw’s tipping rates to try to keep non-local trash out.
And yes, it’s true, in the past the City literally had tons of garbage literally being trucked in from all over to take advantage of our much lower tipping rates.
But there is also an additional reason pointed out by critics - back door taxation.
Question - Is it true the City siphons off funds from the self financing landfill for other things?
Yes, the City does charge a franchise fee against all of their utilities - water, sewer and solid waste - and spends the money elsewhere in the Operating Budget.
To help better understand this MJ Independent filed an FOI into the franchise fees charged in the more recent past.
In the Budget Committee meeting of March 26, 2017 former Councillor Brian Swanson attempted to stop the practice of charging franchise fees for water and sewer.
The motion of reconsideration was defeated.
Further, to the reconsideration request Budget Committee went on to agree to a franchise fee, being charged against the Solid Waste utility.
Budget Committee minutes from March 26, 2017 showing a franchise fee being charged against the solid waste utility
“THAT starting in 2017, a 5% franchise fee be instituted for the Solid Waste Utility based upon 5% of the total previous year's revenues,” the minutes from the March 26, 2017 Budget Committee read.
Although I did mention there has been a franchise fee - of one sort or another - charged during budgets against the Landfill dating back decades.
The policy - to subsidize property taxation has been going on for some time.
It was a policy decried by former Councillor Don Mitchell who saw it as part of a tax shift from more affluent homes to poorer neighborhoods.
Both former Councillors Swanson and Mitchell saw the franchise fees as hiding true taxation levels albeit they had a fundamental disagreement on spending public funds.
The collection of franchise fees has in fact been used by the City to bail out their operations.
In the public minutes of the May 9, 2022 Executive Committee meeting a motion was made to charge the solid waste utility a one time franchise fee to bail the City out of a financial shortfall.
On May 9, 2022 Executive Committee agreed to “An additional one-time increase in the Solid Waste Utility Franchise Fee of $164,990.”
The need to take a one time increased payment or franchise fee of $164,990 was to make up for a “shortfall” in the Provincial Revenue Sharing Grant.
This one-time increase was above and beyond the five percent franchise fee already charged against the Solid Waste Utility.
Question - Just how much has the City collected as franchise fees from the Solid Waste Utility in recent years?
The franchise fee from the Solid Waste Utility has transferred from $170,000 in 2017 to an all time high of $954,118 in 2022 (the 2022 amount reflects the additional one time $164,990 to make up for the shortfall in Provincial Revenue Sharing).
Amount charged in franchise fees to the Solid Waste Utility from 2013 - 2024 - source City of Moose Jaw
If you were to transpose the amount collected as a franchise fee from the Solid Waste Utility into a percentage amount of property taxes.
The range - reflected as property taxes - over the 10 year period of 2013 to 2024 is one percent and higher.
It also needs to be remembered that the franchise fees posted here do not include the fees charged to to the Water Utility and the Wastewater (sewer) Utility.
Question - Do the proposed increased tipping rates for the landfill have any affect on the City’s operating budget? Will the proposed increase not only help keep out garbage from other locals, but also give City Hall more operating cash?
Although the started need to increase tipping rates for the landfill is based upon Moose Jaw falling behind what other jurisdictions charge at their landfills, there is an impact on the City’s other bottom line.
That is the operating budget.
Any increase in fees will in the following year - so long as the City maintains the five percent franchise fee based on the landfill’s income from the previous year and there is no decrease due to the increased fees and other factors - will be reflected in a higher franchise fee available to subsidize the City’s operating budget.
Question - Is this not hidden taxation?
In order to answer this question, you need to look at it either historically, or from a more modern perspective.
Historically there has been a tax shift when it comes to taking residential garbage collection off of property taxation, and moved it to a mandatory fee for service.
This was decried by former Councillor Don Mitchell as an unfair tax shift from more affluent to poorer residents.
Councillor Mitchell also said the same pertained to the City’s two other utilities - water and wastewater.
For other critics of the policy it’s seen as a means to hide the actual rate of property taxation the City is asking for.
Things which in the past were paid for by property taxation - residential garbage collection, sewer and water system updates - are now being slid into fees, which hide the truth taxation rate.
A more modern look at the issue might have you responding that the move is actually done as a means of property tax fairness.
Property owners who pay higher property tax rates may see it as a great benefit, and that they are no longer subsidizing lower taxed property owners.
For some, it’s a move towards a more fair, flat tax.
Question - What is the likely impact on business?
MJ Independent was initially asked by a couple of local waste collection businesses to look into this issue due to the impact upon their livelihoods.
A major concern raised by businesses to us was that they were unaware, and in reality, shocked to find out the commercial shipping rates they’re being charged are being used for far more than the landfill’s operation.
It’s an added expense they do not like, and at the same time, an added expense they have to pass on to their local Moose Jaw clientele
They did not want to participate in an article, but at the same time they were curious if what they had heard about shipping fees going elsewhere was in fact, true.
It also need to be noted that the issue of having two commercial fees - one in-town and one for out of town commercial solid waste businesses - was also discussed and rejected by Council in the past.
Former Councillor Swanson had floated the idea of supplying stickers to local solid waste businesses - thereby allowing a cheaper rate for Moose Jaw based businesses - was rejected at the time.
Local solid waste collection businesses told MJ Independent the increased tipping fees have to be passed on to customers increasing the cost of doing business in Moose Jaw.