Prescott faces solid‑waste shortfall; staff propose rate study and possible interim increases

Prescott City officials told council at the May 19 budget workshop that the solid‑waste enterprise fund faces immediate financial pressure and will require policy action to avoid a mid‑year deficit. Public Works staff said rises in hauling and disposal fees, coupled with deferred vehicle purchases, have eroded the fund balance and left the division with a funding gap under current rates.

Brady Higs, field operations manager, said the solid‑waste enterprise serves roughly 25,000 residential customers and about 1,500 commercial accounts. He noted sharp cost increases: hauling costs for the city’s transfer operations rose about 104% from 2020 to 2025 and disposal costs moved from $2.5 million to $3.4 million in that period. The city currently receives limited competition for hauling contracts — staff said one qualified regional bidder responded to recent procurements — and vehicle replacement prices have risen roughly 50%.

Higs highlighted two FY27 program priorities tied to operations and safety: a lithium‑battery drop‑off program to reduce fire risk inside collection trucks (staff reported nine truck fires over two years linked to lithium‑ion batteries), and an inert debris crushing program to process concrete/asphalt/millings for reuse, noting millings and inert piles are nearing capacity (city estimates ~20–25k tons each).

Finance director Lars Johnson presented two financial scenarios. Under current adopted rates the solid‑waste fund would face an estimated $1.2 million deficit in FY27 (using the packet assumptions). As an illustration, staff showed a second scenario that would bring operations back to positive if an interim rate (example modeled at $31/month residential, with stepped increases thereafter) were adopted effective October 1 or January 1; that scenario would produce positive net operations and allow vehicle purchases over several years without loans.

Staff recommended launching a comprehensive rate‑and‑fee study in July to examine residential and commercial monthly rates, transfer‑station tipping fees and optional services (Christmas tree collection, brush pickup, HHW events), and to evaluate a possible municipal self‑haul/collection option to reduce reliance on a single contractor. Johnson explained the timing constraints for an interim increase: state notice requirements mean the earliest effective date would be October 1 if council approves by late summer (publication and 30‑ to 60‑day notice requirements apply).

Council discussed whether to adopt an interim increase ahead of the full study. Several councilmembers emphasized the need to avoid prolonged use of restricted reserves (landfill closure fees) to cover operations. Staff said they would return on May 26 with follow‑up materials and that adopting an interim change would require public notice and a council action item in late summer if council desires that path. No rate vote occurred at the workshop.