A proposed $10-a-ton surcharge on the disposal fee at landfills and incinerators may not generate enough revenue to offset the beverage container tax, the City Council has learned.
The council is looking at the surcharge as a substitute for the beverage tax, which generates $6 million annually. Council members are under pressure from the beverage industry and retailers to terminate the container tax during the current fiscal year, which ends June 30. The council has resisted efforts to repeal the container tax until a substitute revenue source is ready.
Edward J. Gallagher, the city budget chief, recently told council members that the surcharge would bring in only $4.5 million to $4.8 million annually -- as much as $2.5 million less than earlier predictions. Original estimates indicated the surcharge could generate as much as $7 million.
The surcharge would be paid by commercial haulers, which would pass it on to their customers. Trash haulers must pay a tipping fee, or disposal charge, of $38 to $68 a ton to dump solid waste at the city- and privately owned landfills and incinerators.
Doug Brown, a city budget analyst, told the council that several long-term contracts the city has with solid-waste-disposal facilities would have to be exempted from the surcharge for legal reasons. Those contracts set fixed tipping fees that can't be changed.
In addition, the administration of Mayor Kurt Schmoke is proposing to exempt from the service charge nine non-profit organizations, such as Goodwill Industries and the Salvation Army, that are in the business of collecting bulk trash for resale or disposal.
After considering these exemptions, budget officials had to revise downward their revenue estimates, Brown said.
City Council President Mary Pat Clarke said she was surprised at the lower estimate, but indicated these exemptions are recommendations only and are subject to negotiation with the Schmoke administration.
"We'll work things out so that we get the revenue estimates back up to the $6 million range," Clarke predicted. But Gallagher maintained the only way to get $6 million annually from the proposed service charge is to increase it beyond $10.
Private haulers and representatives from the solid-waste-disposal industry object to the proposed surcharge, contending it would take away any profits in the business and force some haulers and disposal facilities to close down.
In addition to the short-term need to raise more revenue, the long-range goal of the legislation is to encourage businesses to recycle.