SOLID WASTE PROGRAMFUNDING OPTIONS

Solid Waste Advisory CommitteeWaste and Hazardous Materials Division

October 23, 2009

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September 11, 2009, SWAC meeting accomplishments:

• Discussed and re-evaluated criteria

• Discussed all funding options brainstormed at July SWAC meeting

• Agreed to complete an evaluation of each funding option as homework– 9 responses received

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• Discuss level of funding necessary

• Evaluate top five funding options

• Choose funding option(s)

• WHMD will submit funding proposal outline to DEQ management for fiscal year (FY) 2011 on Monday

• Funding proposal write-up due November 9, 2009

Process Goals

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Today’s Objectives

• Discuss level of activity to be funded– Current (39 Full Time Equivalent [FTE])– Core (42 FTE)– Future (?? FTE)

• Examine the top five funding options• Decide which funding option(s) will be

recommended to Governor– FY 2011– FY 2012 +

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Budget Update

• Governor signed FY 2010 DNR/DEQ budget PA 118

• Includes $1.5 million transfer from Solid Waste Management Fund Perpetual Care Account to Solid Waste Management Staff Account

• $3.1 million projected from Solid Waste surcharge

• Will spend $5.3 million for current program in FY 2010

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SWMP Activities

• Solid Waste Planning - last round of Plan updates were initiated in 1997, completed in 2002.

• Beneficial use follow-up• Community support for

recycling• Compost inspections• Routine post-closure

inspections at landfills• Prohibited waste jurisdiction

verification reviews• Ground water monitoring

audits

Required by Statute, not being done

Other Programmatic activities not being done

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Evaluation

As homework, SWAC members evaluated all funding options against criteria using the following scale:

0 = No/ does not meet criteria

1 = Maybe/ no strong feeling either way

2 = Yes/ meets criteria

Responses were compiled and averaged.

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Funding Options and SWAC evaluation

1. Revised Penny Plan (16.9)2. Solid Waste Surcharge (13.8)3. Expanded half-back deposit

(13.6)4. Generation Fee (12.7)5. Surcharge on waste at other

disposal areas (12.3)6. License waste haulers (11.9)7. Review fees (11.3)8. Increased application fees

(11.3)9. Inspection fees (11.2)10.Sales tax on waste disposal

services (11.1)11.Deposit escheats (10.4)12.Garbage bag/ compost bag tax

(10.2)

13.Dedicated sales tax on products that generate waste (9.79)

14.Plastic bag tax (9.88)15.Dedicated sales tax on products

that generate waste (9.79)16.Expanded Bottle Bill (9.6)17.Property tax on waste

management systems (9.57)18.DEQ consulting fees (9.39)19. Incomplete, withdrawn or denied

applications (8.86)20.Fee on all diverted material (8.55)21.Land application fee (8.07)22.Beneficial reuse application fee

(7.83)23.Local fees back to state (7.1)24.Fees on processing scrap metal

(5.38)

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Revised Penny Plan

Description: adds an additional $0.01 to all retail transactions over $2.

Primary Payer: Anyone making a purchase over $2Total estimated revenue: $42 million

Most recent proposal (HB 5612 of 2008) proposed revenue would go towards supporting recycling programs. A Revised Penny Plan would fund DEQ programs. (see next slide for more detail)

Collection system: Department of Treasury will collect (similar to sales tax?)

Comments received: “Should be classified as a fee”Where is it being done?:

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Penny Plan (cont.)

• 2008 version (HB 5612) included following distribution:– Fifty percent of the funds will go to the local units of government

for recycling and waste diversion programs operated by the local units. Money distributed is in proportion to the money spent on recycling the previous year.

– Forty percent of the funds will be distributed as grants to fund persons with recycling and waste diversion programs, including governmental and nongovernmental entities.

– Ten percent of the funds will be used for a comprehensive public litter abatement program that includes education about, and advocation of, litter abatement.

• The last signed bill analysis completed by DEQ staff estimated 6 additional FTEs would be required to administer these recycling and litter abatement programs.

• DEQ has not supported the Penny Plan in the past as it has included a provision to repeal this funding mechanism if the Bottle Bill is expanded.

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Description: Current solid waste surcharge for Type II landfills is $0.07 per cubic yard or $0.21 per ton. As waste goes down, so does surcharge revenue.

Primary Payer: Landfill owners collect from generators

Estimated Total Revenue: past proposals have incorporated a graduated increase over a period of years.

– November 2008 proposal: graduated increase ending at $0.37/ton over a period of five years.

– Increase to $7.50/ton would provide $136.9 million based on 2008 waste data.

– Annual surcharge for captive Type III landfills would also be increased. (see next slide)

Collection system: already in place

Comments received: “The sustainable argument could be addressed if the fee were increased as the state had increased success in ‘utilizing’ material.”“A small surcharge might be marketable. It already has worked in Michigan and other states.”

Solid Waste Surcharge

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Other State’s surcharges

Where is it being done?

Illinois approx $2.22/ton

Iowa $3.25 to $4.75/ton

Wisconsin $5.90/ton

Ohio $3.50/ton (proposed $4.75)

Pennsylvania $4/ton

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Solid Waste Surchargeproposed Type III fee increases

Type of Waste  Annual Volume Fiscal Year Fee

Type III Captive Up to 24,999 tons Present - FY 2010 $500 per year

25,000 tons to 49,999 tons $1,000 per year

50,000 tons to 74,999 tons $2,000 per year

75,000 tons to 99,999 tons $2,500 per year

100,000 tons or more $3,000 per year

Type III Captive Up to 24,999 tons Proposed $1,000 per year

25,000 tons to 49,999 tons $2,000 per year

50,000 tons to 74,999 tons $4,000 per year

75,000 tons to 99,999 tons $5,000 per year

100,000 tons or more $6,000 per year

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Expanded Half-Back Deposit

Description: A $0.10 deposit is paid on an expanded list of beverage containers and $0.05 is returned at time of redemption.

Primary Payer: Anyone purchasing a beverage containerEstimated Total Revenue: $400,000,000/yearCollection system: similar to current system, the state would

just keep halfComments received: “Need allowance for and method to

direct funds redemption/take back centers to take pressure off stores.”

“NO. Deposits prevent comprehensive recycling from being implemented.”

“Concern that there will be a huge education program needed as well as a new state program to manage this.”

Where is it being done? Nova Scotia has half back deposit on all beverage containers except milk.

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Generation Fees

Description: A fee is applied to all waste generators by type; does not depend on how much is generated- flat fee

Primary Payer: residential, commercial and industrial waste generators

Estimated Total Revenue: $3 to $12/tonCollection system: would need to be developedComments received: “not enough info to evaluate.”“PAYT but it would be hard to market to the public.”Where is it being done: Ohio, Eaton County, Genesee

County

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Description: Currently the solid waste surcharge is only assessed on waste in landfills, it is not charged on waste sent to municipal solid waste incinerators, materials sent to Material Recovery Facilities (MRFs), or yard clippings sent to registered composting facilities.

– While Michigan’s 3 municipal solid waste incinerators currently are not required to report waste volumes to the DEQ, the DEQ understands that the volumes represent approximately 5 percent of the total volume of solid waste disposed of in Michigan each year. This would amount to 2,855,994 cubic yards in 2008.

– According to the 2001 Recycling Measurement Project completed by the MRC (the most recent data available), approximately 5,431,026 cubic yards of material were processed by MRFs.

– In 2008, 1,103,897 cubic yards of yard clippings were at registered compost sites.

Surcharge assessed on waste disposed at

other disposal areas.

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Expanded Surcharge (cont.)

Primary Payer: Landfills, Incinerators, MRF owners and/or registered compost facilities

Where is it being done?Estimated Total Revenue: If the current surcharge was

extended to include all listed disposal options it would generate an additional $657,364 annually.

• Could assess different rates for different disposal options Collection system: Already set up and working, would

have to include Incinerators, MRFs, and/or registered composting facilities.

Comments received: “It is fair and may encourage recycling since it supports a PAYT system.”

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Funding Option Discussion

• Which options should we focus on?

• Can any of these work together to provide a “portfolio” approach?

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Increased Application Fees

Description: Increase construction application fees to be more aligned with those of the other states in the region. Require annual license fee as opposed to one fee every five years.Remove discount if renewal fee is license is renewed one year prior to expiration.

Primary Payer: Landfill ownersTotal Estimated Revenue: unknown

Annual average current fees other states' fees

Type II $750-$1,500 $1,000- $80,000Type III $250-$1,000 $1,000- $20,000Processing Plants/Transfer Stations $250-$1,000 $2,500- $12,500

Type II $250- $30,000 $7,700- $60,000*Type III $2,500 $1,500- $7,700*Processing Plants/Transfer Stations $500 $750- $2,000*

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Construction Permits

Operating Licenses

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Review Fees

Description: • Remedial Action Plans (2-3 a year). Current language exists in the legally

enforceable agreements included in most RAP that allows the DEQ to provide a Summary of Response Activity Costs to the facility along with a demand for payment of those costs within thirty days of the notice, however the DEQ has chosen not to bill for these costs.

• Construction documentation (approx. 31 last year)• Quarterly monitoring reports (for both active and closed facilities), • Plan revisions (lechate recirculation plans, minor plan revisions and hydro

geological monitoring plan revisions).Primary Payer: Landfill ownersTotal Estimated Revenue: If the DEQ began charging $1,500 for each RAP

review, $4,500 would be generated annually. Charging $1,000 for each construction documentation review would generate $31,000 annually

Annual average current fee other states' feesunknown $0 5500+

2-- 3** $0 $1,650+31** $0 $1,000+

unknown $0 $500+877 $0 $500+ Compliance Inspections

Closure Plan ReviewsRemedial Action Plan ReviewsConstruction Documentation ReviewsAnnual Report Reviews

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Other DEQ Fees

Incomplete, Withdrawn or Denied ApplicationsDescription: If a construction fee is not complete the fee is returned to

the applicant, if it is withdrawn or denied, 1/2 of the fee is returned to the applicant. A legislative change could end this practice.

Primary Payer: Landfill ownersEstimated Total Revenue: unknown

InspectionsDescription: an average of 877 compliance inspections are conducted

each year (includes inspections beyond quarterly inspections). – currently 166 licensed solid waste facilities in Michigan including

landfills, solid waste impoundments, transfer stations, and processing facilities.

– If each of these facilities was inspected four times a year, this would result in 664 annual compliance inspections.

– 82 construction inspections and other closing and post closure inspections were reported last year.

Primary Payer: Facility ownersEstimated Total Revenue: unknown

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Other DEQ Fees

DEQ Consulting FeesDescription: a consulting fee would be assessed technical

assistance phone calls and visits provided by DEQ staff. – requires increased tracking of time by the DEQ employee, as

well as a billable system to be put in place. – may be a flat hourly rate, or may vary depending on the

experience or class of the employee (similar to private consulting fees).

Primary Payer: Anyone seeking DEQ consultEstimated Total Revenue: If we assume half of all SWMP

employees spend one hour a day providing technical assistance to customers, the DEQ would log 43,680 consulting hour a year. Billed at a very conservative rate of $50 an hour, this amount of consulting would generate $2.1 million annually,

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Beneficial reuse application fees.Description: Approximately 10 requests to beneficially re-use material

are made each year. A quick survey of other states that charge an application fee for beneficial re-use (approx. 7 states) charge anywhere from $50- $5,000

Primary Payer: Anyone applying for beneficial reuseEstimated Total Revenue: unknown

Land application feesDescription: The volume of material land applied in Michigan is

unknownPrimary Payer: Anyone land applying wasteEstimated Total Revenue: Assessing a $0.21 per ton fee on this

waste would generate $3,300 annually.

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Material Recycled (tons)Percent

RecycledDisposed (tons)

Number of Facilities

Pulp/ paper/ wood sludge

95,325(+18,529 from Canada)

24.2% 298,644 6

Shingles 18,089 Unknown Unknown 3

Scrap Wood 15,990 Unknown Unknown 2

Cement Kiln Dust 37,116 425,047 8.7% 2

Foundry Sand90,182

(+115,446 Landfill)69,670

32.8%(74.7% landfill)

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Food Processing 15,709 Unknown Unknown 20

Coal Ash 164,600 Unknown Unknown 19

Drywall Unknown Unknown Unknown 3

Slag Unknown Unknown Unknown 121

Wood Ash Unknown Unknown Unknown 6

Metal Unknown Unknown Unknown Unknown

Water Softener lime residuals

Unknown Unknown Unknown 15

Totals 437,011

Beneficial Reuse

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Criteria

• Equitable• Broad Based• Reliable and Enforceable• Easy to Pay and Collect• Sustainable• Marketable• Encourages choices consistent with the

goals of the Solid Waste Policy• Provides long term funding• Provides short term funding

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Next Steps

• Future meeting dates– Friday, November 6 9:30 a.m. – 3 p.m.