Slow economy cutting into Fort Smith sanitation revenue

The economy also is pressuring the operations at the Fort Smith Department of Sanitation, with revenues well off the 2008 pace and off the pace required to cover costs.

For the first half of 2009, total revenue for the department was $5.82 million, compared to a 2008 total of $14.09 million. Waste materials sent to the landfill totaled 128,108 tons for the first half of 2009, compared to the 2008 total of 312,642.

“The economy is affecting our solid waste collections and disposal as it is for many landfills and collection companies nationwide,” noted Joseph Hopper, a division manager for the department. “Solid waste collections for the residential and commercial divisions are meeting budget estimates for the most part.”

Hopper said landfill operations and industrial collections are below estimates for the first half of the year, but typically generate more revenue in the last half of a year. He also said the activity related to the April and June 2008 storms — collection of roofing shingles and siding from hail damage — “were an anomaly” on the 2008 results.

Indeed, 2008 revenue was 12.2% higher than 2007 revenue, and tonnage in 2008 was 8.9% more than 2007.

The Department of Sanitation is an enterprise operation of the city, meaning it operates somewhat as a business outside the city’s budget and is responsible to cover its cost of operations with its revenue. Hopper said the estimated break-even point for the department in 2009 is $13.9 million. Revenue for the department comes from six basic categories: residential, commercial, industrial, landfill operations, sale of landfill gas and recycling,

While less waste is good in that it extends the life of the landfill, it also has the negative effective of reducing revenue needed to prepare for future landfill expansion, Hopper said, adding that landfills are “scientifically engineered systems” that are very expensive to operate and maintain.

“We are currently planning our next 14-acre landfill expansion to begin in 2010 at an estimated $3 million. You have to put waste into the landfill to generate revenue for future expansion,” Hopper explained.

Another victim of the economic times is the revenue from the sale of landfill gas. Methane is a by-product of the decomposition of the thousands of tons of waste at the landfill. A $6 million investment by Cambrian and South-Tex Treaters in 2005 improved the quality of the gas, allowing it to be sold as “pipeline quality” gas. The effort literally paid off, with the department’s gas revenue jumping from $57,490 in 2006 to $210,561 in 2008. However, falling natural gas prices in 2009 were responsible for pushing gas revenue to $44,626 for the first half of 2009 — well under the 2008 pace.

“The price of gas went from $8.86 per MMBtu in June 2008, to $2.68 in June 2009 (69.8% decrease) with minimal fluctuations in volume,” Hopper explained in an e-mail note.