HomeMy WebLinkAboutStaff Report 14275
City of Palo Alto (ID # 14275)
City Council Staff Report
Meeting Date: 5/9/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Approval of $900,000 Budget Amendment in the Refuse Fund for Fiscal
Year 2022 for Collection, Hauling, and Disposal of Refuse for an
Administrative Correction
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that City Council amend the Fiscal Year 2022 Budget Appropriation for the
Refuse Fund by (2/3 approval required):
1. Increasing contract funding for Collection/ Hauling/ Disposal Administration by
$900,000; and
2. Decreasing the Ending Fund Balance by $900,000.
Background
GreenWaste of Palo Alto (GWPA) is the City’s refuse hauler for collecting recyclable,
compostable, and landfill materials, and processing recyclable and compostable materials. On
January 22, 2019, Council approved the Second Amended and Restated Agreement with GWPA
(Staff Report #9752) and extended the agreement for five years to end in June 2026.
Approximately 60% of the Refuse fund operating budget is annually appropriated for the GWPA
contract to provide collection and processing services of discarded materials from the City.
Each fiscal year staff estimates the expenses needed for the contract year, conducts accrual and
technical clean-up of expenses, and creates an adjustment to the budget in coordination with
the Administrative Services Department’s Accounting division and Office of Management and
Budget. This annual administrative action ensures that any excess carry forward amount from
the contract encumbrance is returned to the fund balance to maintain a healthy reserve.
Discussion
As part of the annual review of projected expenses and carried forward budget, an
administrative error occurred resulting in an overestimate of funds being transferred from the
Fiscal Year 2022 operating budget to the Refuse Fund balance and accounted for in the ending
balance for Fiscal Year 2021. As a result, the specific commitment item for Collection/ Hauling/
Disposal Administration in the operating budget is not sufficient to cover the full expenses
projected for the GWPA contract in Fiscal Year 2022. Based on analysis using actual expenses
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from July 2021 to March 2022, staff recommends a budget amendment to increase the Refuse
Fund operating budget by $900,000. Table 1 summarizes the current budget compared to the
projected GWPA expenses for the year. The budget amendment is necessary to cover all GWPA
expenses and compensation for the rest of Fiscal Year 2022.
Table 1: Projected GWPA Expenses and Budget Comparison
Amount
Current Budget $19,260,668
Projected GWPA expenses for FY 2022 $20,157,000
Difference ($896,332)
Recommended budget amendment
amount
$900,000
Timeline
The budget amendment is needed before the end of Fiscal Year 2022 to ensure all expenses to
be incurred by GWPA can be compensated.
Under Section 12 of the City Charter, the proposed amendment must be approved by a two-
thirds vote of the Council.
Resource Impact
A budget amendment in the Refuse Fund is recommended to cover the expenses under the
GWPA Collection and Processing contract. Staff recommends an appropriation of $900,000 in
the Fiscal Year 2022 Collection/Hauling/ Disposal Administration Operating budget of the
Refuse Fund and an offset by a reduction of $900,000 in the Refuse Fund’s Rate Stabilization
Reserve balance as indicated in Table 1.
Policy Implications
Authorization of this budget amendment does not represent a change to existing policies.
Stakeholder Engagement
This is an internal budget action; stakeholder engagement has been limited to internal
departments including Public Works, Administrative Services, and Office of Management and
Budget.
Environmental Review
Council action on this item is not a project as defined in section 15378(b)(4) of the CEQA
Guidelines because a budget amendment is a government fiscal activity which does not involve
any commitment to any specific project which may result in a potentially significant physical
impact on the environment.