Pandemic Strains Local Finances: Budget Strategies of U.S. Waste and Recycling Departments

Among the many changes 2020 brought, cities across the United States commonly saw curbside trash piling up, sustainability projects delayed, and recycling programs interrupted. These are just some of the situations residents may see in the future—as local governments grapple with the financial impacts of the pandemic.

While some residents were surprised by these changes, Bob Gardner of SCS Engineers found them expected. Cities with constrained budgets still need to provide sanitation services, but under new financial constraints, the form of programs like trash collection and recycling may no longer be as they once were.

"What we need to do is take off the rose-colored glasses," Gardner said. He serves as senior vice president of the firm's solid waste management practice. Every program has a cost, and if rate increases—a traditionally unpopular option—are off the table, then the programs themselves may have to be adjusted.

The pandemic and the gaps it created in many local budgets forced cities to change how they viewed problems within months. Compared to other government services, solid waste management is a critical service and is often less susceptible to cuts. But as many cities saw revenue decline due to the pandemic, or expenses rise due to increased residential trash volumes as residents spent more time at home—and some cities experienced both—their options were limited.

Solutions range from reducing service frequency to considering permanent remote work to save on rent, which may force departments to try cost-saving measures they had never considered before.

"No one anticipated this, and typically you don't budget for an emergency like a pandemic," said Michael Fernandez, director of Miami-Dade County's Department of Solid Waste Management.

A balancing act

Several experts noted that, overall, waste departments operating on an enterprise model are more resilient to economic downturns than those relying on general funds. However, as the pandemic persists, some fee-based governments have begun to worry: prolonged resident income shortfalls and an increase in evictions could lead to revenue declines—said a senior executive of a national association of local governments.

Take the City and County of Honolulu, for example, whose solid waste budget relies on the general fund, primarily from property taxes, which currently estimates a shortfall of about $400 million. Lori Kahikina, director of Honolulu's Department of Environmental Services, said all department spending needs to be cut by 10%.

Kahikina's department has already achieved some notable savings. This summer, a redesigned bulky item collection program—a pre-pandemic priority—reduced monthly overtime from 13,000 hours to about 8,000 to 9,000 hours. But these savings were already factored in before the 10% cut requirement.

So, Kahikina and her team had to be more creative. Currently, the department changed curbside recycling from twice a month to once, and rerouted collection routes to minimize driving time.

"We're trying to think outside the box on how we can do things better and more efficiently," Kahikina said.

Honolulu is a typical example of relying on a depleted general fund, but fee-based services are not necessarily immune to budget problems either.

Phoenix's Public Works Department had not raised solid waste collection rates in 11 years until the city council approved a rate adjustment on February 11. The first rate increase began in April. Over the next two years, solid waste fees will cumulatively rise by $6.40, with an additional 2% annually to address inflation.

"If it weren't for the actions taken in February, the story I'd be telling now would be very different," said Ginger Spencer, director of Phoenix Public Works. However, the department still expects to cut spending this fiscal year and beyond.

From March to June this year, the department's solid waste branch spent $1.9 million more than expected on curbside collection and bulky item removal. When Spencer and the department briefed other officials on these costs, the city allocated $1 million from pandemic relief funds to compensate. Spencer and her team estimate the same services may need an additional $2.34 million by December, and unless more relief funds arrive, they plan to cut and reallocate from the existing $147 million operating budget.

Phoenix's increased curbside collection spending stems from a surge in trash and recycling volumes, while the department also needed to purchase more personal protective equipment for frontline workers. Many local waste departments faced similar issues: even if available funds remained unchanged, the cost of providing essential services during the pandemic had risen.

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"No one anticipated this, and typically you don't budget for an emergency like a pandemic."

Michael Fernandez

Director of Miami-Dade County's Department of Solid Waste Management

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In Miami-Dade County, some additional costs have been offset by commercial and municipal customers hauling larger volumes to disposal sites. Curbside collection operates on an enterprise model, with tipping fees charged at drop-off points. Fernandez said this revenue source grew significantly during the pandemic, but the increase was not enough to cover the full rise in costs for collection, processing, recycling, and disposal—most of which the department operates itself—as well as protective equipment costs and employee overtime. Fernandez hopes previous pandemic relief funds will cover the gap.

In some cases, the surge in residential trash actually helped public works employees secure budget increases.

Greensboro, North Carolina, pays for curbside collection through the general fund and received the same funding this fiscal year as the previous year. But for four years, Chris Marriott, deputy director of field operations, and his colleagues had been advocating to expand a fleet that had not grown since 2011. During that time, an estimated 16,000 households were added to weekly collection routes. Marriott's argument was straightforward: "We're running out of capacity, and the trucks are wearing out."

The COVID-19 pandemic strengthened that argument. The department did not have enough vehicles to handle the surge in curbside collection volumes, and wanting to avoid two people per truck, it temporarily suspended yard waste collection this spring. When officials learned how little operational slack the department had in its trucks, plans changed. Funding will be allocated in fiscal year 2021 to add several vehicles.

Since it is unclear how long residents will need to work from home and maintain social distancing, waste departments also find it difficult to predict how long residential trash service costs will remain above normal levels.

Curbside collection volumes have already fallen from the early pandemic period—when many companies and cities reported increases of about 20%. David Biderman, CEO of the Solid Waste Association of North America (SWANA), said national levels are now about 5% to 10% higher than pre-pandemic.

Meanwhile, Fernandez noted that if businesses continue to choose remote work, these "new normal" waste volumes could persist indefinitely. In fact, his own department might make that choice to save on rent.

Tough choices

A more common approach some regions are taking to address current and future budget gaps is freezing hiring. Some freezes—such as in certain areas of Arizona—lasted several months, while others are still ongoing.

Los Angeles implemented a hiring freeze earlier this year and began a citywide buyout of about 2,500 soon-to-retire employees in November. These measures also apply to LASAN, which has seen its budget reduced by 10% due to residents defaulting on payments and commercial customers permanently closing during the pandemic.

"We've reached the point where maintaining minimum staffing levels has become a challenge," said LASAN Director Enrique Zaldivar.

Hiring freezes also bring new difficulties. Too few employees—whether due to the freeze or pandemic-related absences—means increasingly limited staff end up being compensated at higher overtime rates.

In some cases, understaffing can lead to trash lingering on streets or temporary interruptions of programs like recycling. Philadelphia and Baltimore were among the cities that experienced this issue in the summer, while cities like El Paso are still dealing with it. Baltimore's recycling program has been suspended since August, but is expected to resume in late January.

More importantly, employees have a limited workload. LASAN wants to avoid night shifts because the risk of accidents multiplies in the dark. Biderman also noted that overworked and fatigued employees face a higher risk of safety incidents.

Other larger expenditures—including those that help achieve sustainability goals—may also be cut. In January, LASAN committed to a fully electric fleet by 2035 and stated that all vehicle purchases from 2022 onward would align with that goal.

"There's still a glimmer of hope that if we have the right financial foundation, later in 2021 we might still be able to finance electric trucks through bonds and spread them over a longer term," Zaldivar said.

Currently, the city has suspended purchases of new trucks and expects that to continue for most of 2021. The department may eventually turn to compressed natural gas vehicles instead, as they are cheaper than electric ones.

Nationwide, other sustainability measures have been similarly impacted. New York City temporarily suspended its curbside organics collection program—which cost more than it yielded even before the pandemic. Philadelphia also disbanded its Zero Waste and Litter Cabinet, which was aimed at driving the city toward its 2035 sustainability goals.

Local recycling in different regions may also be affected, continuing a trend that has persisted for years due to financial changes. Whether communities prioritize the service depends on local politics and culture, said Gardner of SCS: "It really comes down to values. How important are your values relative to money?"

Honolulu knows this issue well. Island life means limited landfill space, but the city has to pay to ship glass and aluminum to the U.S. mainland.

"Honestly, I don't know where those products end up anymore," Kahikina said. "As far as I know, the contractor may sell them, and then they go to a landfill in another state." If so, she would prefer those materials go to the island's waste-to-energy facility.

In Phoenix, the recycling program will also be retained. The city had set goals to achieve zero waste by 2050 and 40% waste diversion by 2020. Phoenix has regressed on that goal, but Spencer said the waste department plans to set annual waste reduction targets in the new year to gradually achieve the 2050 goal.

On the other hand, Gardner heard some city managers at a recent National League of Cities conference suggest eliminating recycling programs because they could no longer find a business case to sustain them.

An uncertain future

As officials look for a way out, solutions to various waste-related dilemmas mostly still come down to more funding—whether through targeted programs addressing multiple local issues or more direct cash grants.

One potential avenue to help local recycling survive is a system considered by President-elect Joe Biden, which combines climate change legislation with green jobs and infrastructure. The U.S. Conference of Mayors (USCM) hopes to launch a program similar to the "Energy Efficiency and Conservation Block Grant Program." In 2009, that program allocated $3.2 billion to cities, states, tribes, and territories to achieve energy efficiency and environmental goals while creating new jobs. A new version of this grant system could help cities hire workers responsible for tasks like reducing recycling contamination.

If the U.S. Environmental Protection Agency actively pursues its goal of achieving a 50% recycling rate by 2030—announced by Administrator Andrew Wheeler in November—federal funding could also become crucial.

"If the federal government is going to set a goal of recycling 50% of municipal solid waste by 2030, it should also provide local governments with the resources to achieve that goal," Biderman said. The Save Our Seas 2.0 Act, signed by President Trump last week, also provides some grants for municipal recycling efforts.

However, targeted funding for waste or recycling is secondary to direct financial aid. The "Big Seven" coalition—including USCM and six other state and local organizations—supports federal legislation like the HEROES Act or similar programs. Biderman said SWANA is one of the industry groups supporting such legislation to boost state and local budgets.

The loss of hotel, tourism, or restaurant taxes does not change the fact that cities have a higher demand for other essential services, such as first responders or trash collection.

Even non-core services provided by some waste departments have seen increased spending. Miami-Dade County provides mosquito control services, which are funded by the general fund. Fernandez does not expect the county to cut that budget, but 2020 was costly for the service, with more residents requesting inspections than usual.

Even before the pandemic, the operational slack in city waste budgets nationwide was thin.

"I've worked with many cities, and I've never seen one with abundant funding," Gardner said. "They always have to go to the city council to fight for it, even if they're an enterprise fund."

The collision of declining revenue and rising operating costs—what Biderman called "a perfect storm, and an ugly one"—remains unclear how long it will last. Whether vaccine rollout can boost the economy remains to be seen, and any local government aid that Congress or the Biden administration might provide next year is also uncertain.

For local leaders seeking advice on navigating the coming months or years, Miami-Dade County's Department of Solid Waste Management offers a model for handling the unexpected. After all, the department is responsible for post-hurricane cleanup in the region each year.

"Be prepared to make solid adjustments at any time," Fernandez said. "You have to continue to motivate and support your employees."

The difference, however, is that the Federal Emergency Management Agency reimburses Miami-Dade County for most of its hurricane costs. For cities dealing with the COVID-19 disaster, whether federal relief will come remains uncertain.