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The Cost to Provide Residential Solid Waste Services is Outpacing Revenue

The Solid Waste Management Division operates from an Enterprise Fund, which is separate from the City’s general fund. SWMD can only charge customers for operations and services provided. The Division’s revenues are primarily generated through user fees and charges for service to residents. The current solid waste rates were last updated in 2009. Over the last decade, the number of residential accounts serviced by the Division has grown by approximately 16%, while revenues have not kept pace with account growth, only increasing by 14%.

Overall operating costs have also outpaced the revenue generated from the added accounts. For example, labor costs have increased by 22%, fuel costs are up 71%, and fleet maintenance costs have increased by 52%. These increased costs have forced the Division to operate in a budget deficit since 2015. This reality has forced the Division to defer needed vehicle replacements, employee hiring, and capital projects to help preserve the budget and stretch the operating reserves. Current estimates project the operating reserves fund will be depleted before the end of fiscal year 2024. Continuing to operate in this manner is not fiscally sustainable, and a rate update is needed to reestablish the Division’s financial health.

The following chart shows revenues, expenses, and operating reserves for the last 12 years.

Rate Study and Report

An independent rate consultant performed a comprehensive rate study that will allow the Division to:

The rate study justifies the need for an update to residential solid waste rates over the next five years, prompting a Proposition 218 rate-setting process. 

The proposed rate solution keeps Fresno’s rates among the lowest in the state.  The proposed rate solution increases monthly fees each year over the next five years to minimize impacts on customers.  A separate affordability program will be proposed to provide assistance to those in need.

Proposed Monthly Rates for Three-Cart Service

The Solid Waste Management Division provides weekly solid waste collection services for City of Fresno residents living in single-family homes, duplexes, triplexes, and fourplexes. The standard service level is for the collection of three 96-gallon carts for green waste/organics, trash, and recycling. The standard service rate is $25.37 per month.

Standard Service Level	Current	FY 2025	FY 2026	FY 2027	FY 2028	FY 2029
96-Gallon Solid Waste Service	$25.37	$30.87	$35.30	$38.70	$41.99	$45.24
	$ Change	$5.50	$4.63	$3.20	$3.29	$3.25

The Division offers an alternate service level of 96-gallon carts for green waste/organics and recycling and a 64-gallon cart for trash. The alternate service is currently $19.20 per month. The following table shows the proposed updated rates for the next five years.

Alternate Service Level	Current	FY 2025	FY 2026	FY 2027	FY 2028	FY 2029
64-Gallon Solid Waste Service	$19.20	$28.12	$32.34	$35.25	$38.25	$41.21
	$ Change	$8.92	$4.22	$2.91	$3.00	$2.96

City of Fresno residential waste customers can request additional carts for use at their homes. The following table shows the current charges for additional carts and the proposed updated rate for each additional cart.

Additional Carts	Current	FY 2025	FY 2026	FY 2027	FY 2028	FY 2029
64-Gallon Trash Cart (Gray)	$7.43	$5.50	$6.33	$6.90	$7.49	$8.07
	$ Change	($1.93)	$0.83	$0.57	$0.59	$0.58
96-Gallon Trash Cart (Gray)	$10.25	$8.26	$9.50	$10.36	$11.24	$12.11
	$ Change	($1.99)	$1.24	$0.86	$0.88	$0.87
96-Gallon Recycling Cart (Blue)	$3.74	$3.47	$3.99	$4.35	$4.72	$5.09
	$ Change	($0.27)	$0.52	$0.36	$0.37	$0.37
96-Gallon Organics Cart (Green)	$3.87	$4.95	$5.69	$6.20	$6.73	$7.25
	$ Change	$1.08	$0.74	$0.51	$0.53	$0.52

Understanding the Proposition 218 Rate-Setting Process

Local government agencies must follow what’s known as the Proposition 218 (Prop 218) process when proposing new or increased rates. Prop 218 requires Fresno’s Department of Public Utilities to conduct the following rate-setting process:

1. Perform an independent analysis of revenues and expenses, develop appropriate rates, present the analysis in a report (rate study).
2. Request City Council approval to conduct the Prop 218 rate-setting process.
3. Mail notices of the proposed rates to property owners and rate-paying customers and inform them about the process to protest the proposed rate update, if they choose.
4. Conduct a public hearing 45 or more days after notices are mailed.
5. Count the number of valid written protests received by the close of the public hearing. A simple majority, or 50 percent plus one, is required for the protest to be considered successful. If less than a simple majority protests the proposed rate update, the Division will request that City Council adopt the proposed rates.

Completed in 2023

• An Independent rate consultant performed an independent analysis of revenues and expenses and prepared a rate study and report.
• Requested City Council approval to conduct the Prop 218 rate-setting process. Fresno City Council approved this initiation at the December 14 City Council meeting.
• Conducted public outreach meetings to educate residents about the proposed rate adjustment plan.

Next Steps for 2024

• March 18: Mail notices of the proposed rates to property owners and rate-paying customers, and inform them about the process to protest the proposed rate update. 
• March – April: Conduct a series of community meetings to educate customers about the proposed rate adjustment plan.
• May 3: New notices sent to all owners and customers.
• June 20: Conduct a public hearing 45 days after notices are mailed.
  • Count the number of valid protest notices received by the close of the public hearing. A simple majority, or 50 percent plus one, is required for the protest to be valid.
  • Without a simple majority, the Division will request that City Council adopt the proposed rates.
• August 1: If adopted, new rates go into effect.

Community Meetings

DPU conducted four Community Outreach Meetings between November 29 and December 6 – one in each quadrant of the City – to discuss the Division’s financial health and the need for a rate update. Those topics included:

1) Residential solid waste services
2) Current cost realities and the Division’s financial health
3) Overview of the Prop 218 Rate-Setting Process

In addition to the community meetings SWMD conducted in late 2023, our team hosted another series of meetings in March and April. Meetings were planned for each council district. The kickoff meeting took place at City Hall on Wednesday, March 27.

Past Meetings

Prop 218 Community Meeting PowerPoint

Questions or Comments?

To learn more about this process, we encourage residential customers to review the video and presentation from our first Community Outreach Meeting, email questions to [email protected], or call 559-621-8218.