SMA delays decision on proposed rate increases

Sweeping proposed rate increases — primarily to Sallisaw’s sanitation, water and sewer services, as well as for landfill usage — touched off a contentious and potentially unresolvable debate Monday that divided the Sallisaw Municipal Authority into two distinct camps that delayed the inevitable for at least another month.

The proposed increases to the city’s Master Fee Schedule include rate hikes that in some cases double current fees, aggressive adjustments that City Manager Keith Skelton advised the board are necessary because the city has chosen to continue ownership and operation of the municipal landfill facility, which faces imminent expenditures of millions of dollars for needed expansion and looming equipment replacement.

It has been as much as five years since the city last raised rates on essential services, assessments board members Julian Mendiola, Josh Bailey and Kristin Peerson are reluctant to invoke. But faced with incurring crushing debt and a daily struggle to fund the landfill while continuing to provide residential and commercial services, board member Ronnie Lowe, board chair Ernie Martens and Skelton, a non-voting ex-officio member, support the proposed increases that will keep the city solvent.

While Skelton projected that the full schedule of increases would result in an average monthly spike of $10.81 per household, Mendiola contended the city manager’s calculations did not accurately reflect most Sallisaw households, and that the impact for residential customers would be closer to $20. Skelton told the board the average impact for commercial customers would be $24.26.

But after more than an hour of dissecting, analyzing and questioning the proposed hikes, sometimes line by line, the board remained at a stalemate and tabled further consideration until the Aug. 14 meeting.

The proposed increases that drew the most scrutiny involved hikes to residential garbage collection, which recommended boosts from $12 to $16 for the first container, and $6 to $12 for each additional container. Mendiola, in particular, pointed out that most Sallisaw households utilize at least two containers, which would translate to a fee of $28 and, obviously, $12 for each additional container. While Skelton asked the board what increase would be fair, wondering aloud why the second container should not be charged the same rate as the first container, the board asked Skelton to rework the numbers for a more palatable proposal by the August meeting.

Looking to refute arguments about the proposed increases being exorbitant, Martens reminded the board that increases have occurred across the board for virtually every other service, product and activity in all aspects of society. While he admitted that no one likes price hikes, those who provide services must do what needs to be done in order to continue to serve their constituents.

Likewise, Lowe emphasized that no adjustments had been undertaken in the past five years, but for the past two years, inflation has exacerbated pricing in all walks of life. He was pragmatic that the city must cover its costs, and that the time has come to do what is necessary for the community. He also admitted that the proposed increases would be difficult for those on a fixed income, which he said he is now in that category, the price hikes must occur.

But Mendiola and Bailey lobbied for incremental increases — baby steps — so as not to incur the public’s wrath and alienate customers. They suggested Skelton develop a pricing scenario for garbage collection of $8 for each additional container.

Mendiola then addressed the proposed increase for landfill tipping fees, which Skelton’s presentation said would need to jump from $34 per ton to $50 per ton. While those who found it difficult to support the $16 hike, they could not refute that an increase must occur in order to operate the municipal facility, but preferred an adjustment closer to $40 per ton.

Skelton also provided to the board proposed tipping fee increases of $52, $54, $56 and $60 per ton, but those figures were not discussed.

City sanitation and landfill superintendent Jamie Phillips also echoed Skelton’s projections, and said landfills serving Fort Smith and Tulsa are currently charging $47 per ton or more, and expects those prices to increase over time.

Skelton then spoke candidly, reiterating his monthslong stance that the city should not be in the landfill business, and reminded the board that suitors are still available to purchase the landfill or to partner with the city.

But Martens cut to the chase, saying the board must “bite the bullet.”

Mendiola and Bailey then shifted their focus on ways to cut costs elsewhere within the city in order to fund the $1.6 million expansion of the landfill with the construction of cell 8A, which Skelton reminded the board would be only a temporary solution, and would serve as a bridge to Phase II expansion.

Increased tonnage at the landfill would salve the financial wound, but Skelton admitted he has had virtually no luck attracting contract customers from other communities to use the Sallisaw facility. He said the city’s largest contract customers are currently LeFlore County Solid Waste (29.8% for 2,096 tons average) and Sue’s Recycling (11.9% for 839 tons average). Other contract customers are Central Arkansas Recycling and Disposal (CARDS), which tendered an unsolicited offer on May 1 to purchase the landfill for $20 million, and MSB Waste.

“There is one company that is pending,” Skelton said of his efforts. “We are waiting on them to get approval from the Arkansas Department of Environmental Quality. What they’re waiting on is approval of their transfer station in order to be able to transfer out down to Sallisaw. The issue is not hauling to Sallisaw, the issue is just getting their transfer station approved. Right now, we’re looking at about 150 tons per day once that does happen. This company is getting into a tight spot, and instead of hauling out of their transfer stations, they may just start sending their residential and commercial trucks to Sallisaw to dump individually. It’s not a very efficient way for them to operate, but the situation in northwest Arkansas at the Tontitown landfill and their need to dispose of their waste, they’re getting down to a point to where that might be what they have to do.”

Because of the potential customer’s immediate need, he said the possibility exists that they could start hauling without a contract.

Skelton said other possible customers with whom he has spoken are currently under contract, but would entertain a Sallisaw proposal in the future, which would not be until mid-2024.

“We’re just kind of at a standstill right now. But that doesn’t change the fact that we have an urgent need to start construction on cell 8A,” which Skelton said would cost $1.6 million. “If everything worked out perfect, I’m still $300,000 to $400,000 short on having enough funds identified to issue a purchase order and to award a contract for 8A. So that’s basically in a nutshell kinda where I’m at right now.”

In seeking to identify other funding resources, Bailey asked why the city doesn’t pursue financing to pay for cell 8A construction, and suggested cutting back on current expenses rather than raising rates.

Skelton reiterated his concern about incurring debt to fund the expansion, and when asked where $400,000 in depreciation previously reported ended up, Skelton explained that depreciation is merely an accounting practice and is not actual dollars that can be used elsewhere.

Landfill to close on Saturdays

The board also approved closing the municipal landfill on Saturdays as a cost-cutting measure, effective Aug. 1. During the past 18 months, Skelton and Phillips said the facility has averaged 28 customers per Saturday, and the average tonnage has been 114 tons for those 77 Saturdays.

By closing on Saturdays, it will allow the city to utilize personnel more efficiently, with landfill employees transitioning to a 40-hour work week Monday through Friday. Closing on Saturdays will also allow equipment to have a full day off, saving wear and tear and prolonging the life of the equipment. This would also save on fuel and maintenance costs. Likewise, if a piece of equipment is in need of repair or must be torn down for repair, then Saturday would provide the best time to accomplish the repairs, if the repairs are completed by the landfill staff.

In approving the closing, the board stipulated that the landfill would be open 8 a.m. to noon the first Saturday of each month on a trial basis for the next six months.

Other business

The SMA also approved:

• Renewal of a contract with Uptown Services to provide consulting services to the SMA related to the DiamondNet fiber optic project. Uptown Services’ retainer fee is $1,000 per month.

• A purchase order in an amount not to exceed $55,000 for purchase of Calix equipment for telecommunications. The quote from Calix is $49,885.54.

• A purchase order to Pro-Rooter Welding of Fort Smith in the amount of $24,950 for removal and reconstruction of maintenance shop at landfill.

• Reinvesting a SMA certificate of deposit with Armstrong Bank for 273 days at 5.13% interest.