Form revised February 6, 2008

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle Public Utilities	Dick Lilly – 615.0706	John McCoy – 615.0768

Legislation Title:

AN ORDINANCE relating to the City of Seattle’s solid waste system, establishing an advanced recovery fee (a green fee) for disposable shopping bags, providing a deduction for the green fee from the City’s business license tax, creating two new positions, and amending Seattle Municipal Code Chapters 21.36, 21.40, and 5.45.

· Summary of the Legislation:

The proposed legislation establishes an advanced recovery fee (ARF), to be called a Green Fee, of 20 cents per bag on every disposable shopping bag of paper, plastic or other material that customers ask for or accept from grocery, drug or convenience stores, effective Jan. 1, 2009.

· Background: (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

This legislation arose from Resolution 30990, which instructed SPU to study the environmental and litter problems of disposable plastic shopping bags and develop proposed solutions, including a possible ban on such bags.  An SPU study by Herrera Environmental Consultants determined that the environmental impact of all kinds of disposable shopping bags was significant and that the impact of disposable paper bags, bag for bag, was overall four times worse than the impact of disposable plastic bags and worse in all impact categories except litter and marine litter.  As a result, Mayor Greg Nickels and Council President Conlin recommended a Green Fee be charged on all bags, regardless of material, in order to discourage the use of throwaway bags and encourage shoppers to use reusable shopping bags, thus reducing the environmental impact and greenhouse gas production caused by the production or logging, manufacture, use, and disposal of these products.

· Please check one of the following:

____ This legislation does not have any financial implications.  (Stop here and delete the remainder of this document prior to saving and printing.)

__X__ This legislation has financial implications.  (Please complete all relevant sections that follow.)

Appropriations:  This table should reflect appropriations that are a direct result of this legislation.  In the event that the project/programs associated with this ordinance had, or will have, appropriations in other legislation, please provide details in the Notes section below.

Fund Name and Number	Department	Budget Control Level*	2008 Appropriation	2009 Anticipated Appropriation
TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Notes: 

The Solid Waste division and the Department of Executive Administration (DEA) expect to request additional 2009-2010 Budget appropriation for work related to the Green Fee, to be financed from fee revenue, though amounts have not been finally determined.  The request may include one-time money for a public information campaign, as well possible inspection staff to verify retailer compliance with the fee.  It would also include approximately $250,000 to DEA to administer the fee.  DEA will provide database management, mailing, and Green Fee collection, which will be cost allocated to SPU.  The terms of this arrangement will be specified in an MOA between the departments.

Anticipated Revenue/Reimbursement: Resulting From This Legislation: This table should reflect revenues/reimbursements that are a direct result of this legislation.  In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Fund Name and Number	Department	Revenue Source	2008 Revenue	2009 Revenue
Solid Waste Fund-45010	SPU	Green Fee		$3,370,000
TOTAL				$3,370,000

Notes:  The amount of revenue the Green Fee will generate is highly uncertain and depends fundamentally on how consumers react to the fee.  The $3.4 million projection above is based on the assumption that Seattle consumers react as vigorously as Irish consumers did to their bag tax and reduce disposable bag usage by 90 percent.  See Attachment 1 to Fiscal Note for more on the revenue projection method and sensitivity analysis.  Of this figure, approximately $250,000 will be cost allocated to DEA for Green Fee administration, leaving about $3.1 million available to subsidize Solid Waste rates and programs.

Total Regular Positions Created, Modified, Or Abrogated Through This Legislation, Including FTE Impact:  This table should only reflect the actual number of positions affected by this legislation.   In the event that positions have been, or will be, created as a result of other legislation, please provide details in the Notes section below the table.

Position Title and Department	Position # for Existing Positions	Fund Name & #	PT/FT	2008 Positions	2008 FTE	2009 Positions*	2009 FTE*
Admin Spec II ,  BU DEA		DEA 00100	FT	1	1	1	1
Tax Auditor, DEA		DEA 00100	FT	1	1	1	1
TOTAL				2	2	2	2

* 2009 positions and FTE are total 2009 position changes resulting from this legislation, not incremental changes.  Therefore, under 2009, please be sure to include any continuing positions from 2008.

Notes:

The ordinance adds to DEA 1.0 FTE Administrative Specialist II, BU, and 1.0 FTE Tax Auditor to provide database management, mailing services, and Green Fee collection services.  These positions are added in 2008 to allow for immediate hiring and ensure smooth start-up of the Green Fee in January, 2009.  SPU may also need additional inspection staff to verify compliance with the Green Fee, but any further staff adds would be proposed as part of the 2009-2010 budget.

· Do positions sunset in the future?  (If yes, identify sunset date):

No.

Spending/Cash Flow: This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects).  Details surrounding spending that will occur in future years should be provided in the Notes section below the table.

Fund Name & #	Department	Budget Control Level*	2008 Expenditures	2009 Anticipated Expenditures
Solid Waste Fund (45010)	SPU	Other Operating (N400B)	$1,150,000	TBD
General Fund	DEA	Revenue and Consumer Affairs	$70,000	$250,000

* See budget book to obtain the appropriate Budget Control Level for your department.

Notes:

In 2008, DEA will set up its Green Fee collection system and hire staff to start Jan. 1, 2009.  SPU will reimburse DEA for these expenses.  The estimate for these startup costs is $70,000.

In 2008, SPU will purchase and distribute free or low cost reusable shopping bags to all Seattle residents with low-income families targeted to receive multiple bags.  The Executive has committed up to $1 million for this.  Actual expenditure will depend on collaborative promotional arrangements reached with stores and groups of stores that will be affected by the Green Fee.  SPU expects these stores will have a strong interest in co-promotion with SPU, as many already are promoting the use of reusable bags.  SPU will ensure that the SWF continues to meet its financial targets even with the unplanned expense of bag distribution.  To do so may require reductions in spending in other areas of the SWF.  Via a future city-wide supplemental budget ordinance, SPU may need to request additional budget authority and/or a transfer from one BCL to another within SWF to support the expense of the bag distribution. Additionally, $150,000 is included in the 2008 SWF spending plan for public education activities in advance of the effective date of the Green Fee.

· What is the financial cost of not implementing the legislation? (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented.)

The current annual cost to the City of collection, recycling, disposal and litter cleanup for the 292 million disposable plastic bags distributed in the city each year is $1,757,723, according to the consultant’s study.  The current annual cost to the City of collection, recycling, disposal and litter cleanup for the 68 million disposable paper bags distributed in the city each year is $892,187, for a total of approximately $2,649,910.  Because of increasing disposable bag use, not implementing the Green Fee would result in continuation of these costs with no reduction and an additional cost to the City of $100,000 per year on average ($3,000,000 additional over the 30-year planning horizon). 

· What are the possible alternatives to the legislation that could achieve the same or similar objectives? (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

A voluntary outreach approach to encourage re-usable bags was considered, but the consultant study found that such programs have limited effectiveness with maximum bag-use reductions of no more than 5 percent.  A ban on plastic bags only was considered, but given the greater environmental impacts per bag of paper manufacturing, this approach would have been counterproductive.

· Is the legislation subject to public hearing requirements:  (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future.)

No.

· Other Issues (including long-term implications of the legislation):

Please list attachments to the fiscal note below:

Attachment 1 – Green Fee Revenue Projections and Sensitivity Analysis