The Waste Management Authority is struggling with cash flow after an audit found several special funds it relies upon have large, old encumbrances, Executive Director May Adams Cornwall said during budget hearings Thursday.
As a result, emergency waste-water system repairs and landfill compliance and closure costs are currently being funded by their operating budget, Cornwall said.
She said WMA expected and was prepared for a nine percent cut in their General Fund appropriation this year.
But "we could not have predicted the 88 percent or $6.9 million reduction in our special funds allotment, which has effectively reduced our overall operating budget by an additional 22 percent," Cornwall said.
These funds are the Sewer Wastewater Fund, the John Capital Improvement Funds, The Anti-litter and Beautification Fund and the Tourism Advertising Revolving Fund. All the funds are in the red and three are over-appropriated.
The Office of Management and Budget sent WMA a letter in April, saying there were a number of old encumbrances on the funds, some dating back to 1996, before the Waste Management Authority existed separately from the Department of Public Works.
Sen. Clifford Graham, chair of the Finance Committee, asked how this was happening now. Cornwall said her understanding is that OMB determined there were large, old encumbrances during a recent audit process, and only the original agency – Public Works in this case – can close them. She said WMA was in talks with Public Works to see about ending those old encumbrances.
With the Sewer Funds, WMA was appropriated more money than was actually collected through property taxes.
Graham said the fact the two property tax bills scheduled to go out this year have not gone out yet, and this must have had an impact on the fund too.
The 2013 and 2014 property tax bills are both scheduled to be issued later this year.
All told, WMA is facing a $17.5 million deficit by the end of Fiscal Year 2015, she said. To address this, WMA has proposed legislation and has petitioned the PSC to immediately assess the conditionally approved higher waste-water user fees on the 2014 property tax bill. And it submitted a petition to impose special waste fees for scrap tires, scrap metal, white goods, used motor oil, electronic and household hazardous waste.
Because WMA expects new revenues from septic disposal fees and from Tibbar Energy USVI, projected revenues have increased to $14.7 million. "As a result, the anticipated revenues will offset FY 2015 operating and capital expenditures and reduce the projected deficit to $3,792,000," Cornwall said.
To address the shortfall, Cornwall said she is asking for:
- direct deposit to WMA of the Sewer User Fee assessed on property tax bills;
- septic disposal fees;
- the gradual, five-year increase of the excise tax on certain bottled and canned items to support the Authority’s solid waste management programs, with direct deposit;
- IRB collection of special waste disposal fees;
- Bureau of Motor Vehicles collection of a surcharge on vehicle registration to pay for disposal of abandoned and used vehicles;
- a trash tipping fee at the landfills and transfer stations;
- a development impact fee for developers planning new housing developments;
- the $28.3 million bondauthorization for landfill closure and compliance costs over the next two years.
Earlier this year, the government asked the Legislature for a $28.3 million bond authorization from the Legislature to finance the landfill compliance and closure work as required by a federal consent decree. The Legislature rejected that bonding bill, authorizing a smaller, short term loan instead, and eliminating the portion devoted to landfill closure. Cornwall said she hoped the Legislature will "reconsider and support a new bill for the landfill closure bond authorization in the very near future."
The governor’s recommended General Fund appropriation for WMA is $22.3 million, a $930,000 reduction from the year before.
It is also budgeted to receive: $4.2 million from the Anti-Litter Beautification Fund; $3 million from the Sewer Fund; $1 million from the St. John Capital Improvement Fund; and $300,000 from the Tourism Advertising Revolving Fund, plus $400,000 in a miscellaneous appropriation.