Johnson Creek concerned about rising recycling costs

Johnson Creek

JOHNSON CREEK -- Like municipalities big and small across the state and country, Johnson Creek is experiencing concerns about possible cost increases in its waste disposal/recycling rates from its waste hauler. Its village administrator is optimistic, however, negotiations will turn out well.

The longtime garbage handler for the village is Johns Disposal Service Inc. of Whitewater. A check with village records indicated Johns has been serving the city since Jan. 1, 1992.

Founded in 1969 as Johns Pick-up Service and incorporated in 1992 as Johns Disposal Service Inc., the John Jongetjes family has been sole owner and operator of the company.

"Johns has seen large growth over the last 15 years in residential municipal contracts," the business' website stated, and cities, towns and villages are serviced in Dane, Milwaukee, Jefferson, Kenosha, Racine, Rock, Walworth and Waukesha counties.

According to Johnson Creek Village Administrator Kyle Ellefson, the village must have a contract with Johns in place by 2019 if it wants to continue service with the firm.

Johns is currently seeking an increase that is higher than the contract allows -- what Ellefson said is a "double-digit" increase of more than 10 percent -- in its residential waste-collection fees.

"That was their initial proposal. We looked at that as a starting point and we branched out to changes in level of services, cost-sharing on recycling costs and revenues. The interesting part of that is if the recycling market is at the bottom, if we get in with the cost-sharing, we could receive revenue in the future."

"Ellefson called that "the risky aspect of this."

The Watertown Common Council recently voted unanimously to raise the city's garbage and recycling fee 20 percent effective Oct. 1. This increase will have the rate go from $11.73 a month to $14.08. The increase was in response to a $60,000 deficit in revenue from drop-off service rates, as well as an increase in service charges from the city's current outside recycling service, Johns Disposal, from $28.81 in August to $50 in September.

The village of Johnson Creek has been engaged in closed-session discussion on its matter in recent weeks and Ellefson said he is optimistic an agreement with Johns Disposal can be reached.

Ellefson said the village was notified approximately two months ago that, as is happening nationally and worldwide, Johns has been experiencing poor revenue from the recyclables market, due in great part to the markets in China evaporating.

"This was an element of our contract with Johns and the market involving China went away. This means there was a glut of recyclables, so (Johns') revenue stream went away," Ellefson said.

According to Ellefson, Johns Disposal representatives have approached several communities across the area about their financial concerns and their contracts with these communities allow them to increase their rates if the market for recyclables declines.

"They had to notify us of the higher rate by Oct. 1 and we can accept the rate or not," Ellefson said. "We are evaluating several options and we are working on our contract with them. We should know by early October whether the contract will end by Dec. 31.

Ellefson said in previous rate structures, there was a garbage expense line and a recycling expense line, with the "bulk" or "large item pickup" falling under the general garbage expense.

"This year," he said, "they have broken it out into garbage, recycling and a new line for 'bulk.'"

With the new expense breakout, the garbage cost dropped by more than $2 per home per month, while the bulk pickup added nearly $2 per home per month.

"So the cost for the combined garbage and bulk pickup is relatively flat," Ellefson said. "The recycling line cost, however, has a very significant increase proposed, and that is truly driving this negotiation."

The Johnson Creek negotiations concern one- and two-family residential buildings, with multifamily complexes and businesses needing to obtain their own trash and recycling service. Businesses are not part of the matter.

Most recently, Johnson Creek had 997 homes that were on the Johns pickup roster and village officials estimate it will exceed 1,000 homes by the start of 2020.

The current rate for garbage and recycling is $15.36 per home, per month in Johnson Creek.

"It is important to note that, unlike some municipalities that pass the cost and cost increases for garbage and recycling service on to property owners on their utility bills, the village of Johnson Creek pays for the residential garbage and recycling directly through the property tax levy," Ellefson said. "That results in thousands of dollars in expenses being added on to our general fund budget, making it increasingly challenging to avoid raising the property tax rate for municipal services, as we have been able to avoid doing since 2016, actually decreasing our tax rate slightly last year."

Ellefson acknowledged Johnson Creek has been a partner with Johns for what he termed "a very long time" and village leaders are hoping to find a middle ground in their contract and budget that works for the village and Johns.

"I think we can meet with them on this," Ellefson said, adding, as of Monday morning, there was at least one more closed session scheduled Monday evening.

"We will be in another closed session this week addressing a counteroffer with the village board," Ellefson said. "We have several options. Johns Disposal and I think we can make it work short-term and even perhaps long-term. In a tough budget year, everything is on the table, but I think we can work something out, at least for the short term. There is a variety of options and we are looking for a good fit for us, and to see if there is a little more competitiveness we can put into the contract."

Ellefson lamented the fact Johnson Creek and many other smaller municipalities are finding themselves on the back end of a huge international issue about what to do with recyclable waste.

"Service changes are also options," Ellefson said. "If we get to a point where (the level of waste disposal services) is not sustainable on our part and Johns can't accept what we can afford, we could terminate the contact at the end of this year and go with another waste handler. But at the end of the day, we should be able to find something workable for both of us."

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