Solid Waste Rate Study
City of Merced
City Council
January 20, 2026
Garth Schultz &
Jordan Muratsuchi
SLIDE
1 Receive study session presentation
regarding recommendations and options for
adjustments to solid waste rates effective
FY 2026/27 through FY 2030/31
Provide direction regarding which rate
adjustment option is desired by Council
Direct staff to proceed with 45-day
Proposition 218 noticing to ratepayers for
the desired option
Recommendation
SLIDE
2 Solid waste services are critical services and are required for health and safety as well as compliance with State laws. The City’s solid waste collection operations are well-managed and well-run – current solid waste rates are reasonable and proportionate to the cost of providing service.
Revenues to fund solid waste services require periodic review and adjustment to maintain the financial health of the solid waste utility.
The City may authorize up to 5 years of solid waste rate adjustments at a time – there are no ongoing automatic
adjustments outside of Council authorization.
Annual adjustments to solid waste rates of 4.5% or 5.3% in FY 2026/27 through FY 2030/31 are recommended.
Executive Summary
SLIDE
3 The City’s last solid waste rate study (2019) resulted in adjustments to rates in FY 2020-21 through FY 2023-24 – rates have remained flat since July 1, 2023.
Primary cost drivers (labor, capital, fuel, disposal, and processing costs) escalate over time & unfunded State
mandates will further increase vehicle costs.
Though reserves in the Solid Waste Fund are currently healthy, without adjustments to solid waste rates, reserves will be fully depleted in early FY 2030-31.
Therefore, adjustments to the City’s solid waste rates are necessary to maintain operations and service reliability.
Background
SLIDE
4 Revenues at Current Rates are $24.90 million
⎻ Rate revenues only = $24.35 million
Solid Waste Financial Plan
Chart 1: Revenue Sources by Type and at Current Rates (FY 2025-26) $18,713,795
$3,225,128
$2,413,008
$384,747
$141,719
$20,000
$- $5,000,000 $10,000,000 $15,000,000 $20,000,000
Refuse Charges
Recycling Charges
Green Waste Charges
Interest
Interdepartmental
State Grants
SLIDE
5 Projected Expenses:
⎻ Current revenues do not fully fund current expenses
⎻ Operating expenses are projected to increase by an average of 4.8% per year Solid Waste Financial Plan
Chart 2: Summary of Current and Projected Expenses
$26,393,000
$26,974,000
$28,946,000
$29,956,000 $32,191,000
$33,404,000
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 SLIDE
6 $24,898,000$26,393,000
$26,974,000
$28,946,000
$29,956,000 $32,191,000
$33,404,000
$18,846,000
$16,770,000
$12,722,000
$7,664,000
$371,000
-$8,135,000
-$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 Revenues Expenses Ending Fund Balance
Fund Balance:
⎻ Will be depleted in FY 2030-31 without rate adjustments ⎻ Minimum balance of 2 months of operating expenses (16%) is recommended Solid Waste Financial Plan
Chart 3: Projections of Revenues, Expenses and Reserves by Year SLIDE
7 Capital and Fleet Expenses
⎻ Vehicle replacement (every 7-10 years) is fully funded by solid waste rates and recommended adjustments.
⎻ Solid waste’s proportionate share of the Corp Yard Phase III debt service is funded by solid waste rates and
recommended adjustments.
⎻ New vehicles and routes are included to accommodate
growth, funded by new solid waste accounts.
⎻ Collection vehicle costs are anticipated to double starting in FY 2031-32 to comply with CARB’s Advanced Clean Fleets – Zero Emission Vehicle requirements.
Solid Waste Financial Plan
SLIDE
8 New Solid Waste Services
⎻ Smaller and cheaper options for commercial garbage and organics services will be made available.
⎻ Parks solid waste services fully funded via new
interdepartmental service charge.
⎻ Special event pricing and rates scalable by event size and solid waste service needs.
Solid Waste Financial Plan
SLIDE
9 Solid Waste Rate Adjustment Options
Option 1:
⎻ 5.3% annually in FY 2026/27 through FY 2030/31
⎻ Projected adjustments for future rate study of
5.3% annually in FY 2031/32 through FY 2035/26.
Option 2:
⎻ 4.5% annually in FY 2026/27 through FY 2030/31
⎻ Projected adjustments for future rate study of
7.2% annually in FY 2031/32 through FY 2035/26.
Solid Waste Financial Plan
SLIDE
10 Solid Waste Financial Plan
Chart 4: Option 1: 5.3% Annual Rate Adjustments
71%
68%
60% 57%
51%
49%
37%
33%
25%
23%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
FY 25-
26 FY 26-
27 FY 27-
28 FY 28-
29 FY 29-
30 FY 30-
31 FY 31-
32 FY 32-
33 FY 33-
34 FY 34-
35 FY 35-
36 Revenues Expenses Ending Fund Balance as % of Expenses) SLIDE
11 71%
67%
58%
53%
44%
38%
26%
22%
16% 17%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
FY 25-
26 FY 26-
27 FY 27-
28 FY 28-
29 FY 29-
30 FY 30-
31 FY 31-
32 FY 32-
33 FY 33-
34 FY 34-
35 FY 35-
36 Revenues Expenses Ending Fund Balance as % of Expenses) Solid Waste Financial Plan
Chart 5: Option 2: 5 Years of 4.5%; Followed by 5 Years at 7.2% SLIDE
12 Solid Waste Rate Study
Chart 6: Comparison of Single-Family Total Monthly Service Rate by Option and Fiscal Year
$54.25
$57.12
$60.15
$63.34 $66.70
$53.84 $56.26
$58.79 $61.44 $64.21
$0
$10
$20
$30
$40
$50
$60
$70
FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31
Option 1 Option 2
SLIDE
13 Solid Waste Rate Study
Chart 7: Comparison of Annual Change in Single-Family Total Monthly Service Rate by Option and Fiscal Year
$2.73 $2.87 $3.03 $3.19
$3.36
$2.32
$2.42
$2.53 $2.65
$2.77
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31
Option 1 Option 2
SLIDE
14 Solid Waste Rate Study
Chart 8: Comparison of Commercial 3 Cubic Yard Garbage
Monthly Service Rate by Option and Fiscal Year
$186.80
$196.70 $207.13 $218.11
$229.67
$185.38
$193.72
$202.44 $211.55
$221.07
$0
$50
$100
$150
$200
$250
FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31
Option 1 Option 2
SLIDE
15 Solid Waste Rate Study
Chart 9: Comparison of Annual Change in Commercial 3 Cubic Yard Garbage Monthly Service Rate by Option and Fiscal Year $9.40 $9.90
$10.43
$10.98
$11.56
$7.98 $8.34
$8.72
$9.11 $9.52
$0
$2
$4
$6
$8
$10
$12
FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31
Option 1 Option 2
SLIDE
16 Recommendation
Provide direction regarding which rate
adjustment option is desired by Council
Direct staff to proceed with 45-day
Proposition 218 noticing to ratepayers for
the desired option