The deadline is approaching for the Region 2000 Services Authority — which manages a multimillion-dollar budget and the Lynchburg area’s regional landfill — to reach a consensus and approve its budget by July 1.
But at its Thursday meeting, a conversation about the proposed fiscal year 2022 budget quickly devolved into a conversation about specific financial policies and the distribution of millions in funds to the authority’s member localities — a conversation that has been a point of contention, conflict and, ultimately, litigation, among the authority for years.
The authority is made up of four member localities, each represented by leadership from the counties of Appomattox, Campbell and Nelson, plus the city of Lynchburg. Together, they operate the regional landfill on Livestock Road on behalf of the authority’s members.
A vote to approve the proposed $7 million budget failed 3-1 on Thursday; the authority will convene again in June to take another pass at it or risk ending the fiscal year without an approved budget.
Services Authority Board Attorney Bill Hefty said without a budget, the administration would not have the authority to spend any money.
But Authority Director Clarke Gibson said he does not think it will come to that since the contents of the budget itself were not the primary issue.
“That’s not likely to happen,” he said. “In one form or another, I’m sure that we can have an approval before June 30.”
A fiscal year 2022 budget proposal was first brought before the board in January and since then has seen a number of changes. The initial proposal included a $1 increase for member and market tipping fee rates at the regional landfill, and a 3% merit-based salary increase for authority staff.
The proposed $7 million budget heard Thursday contained no rate increases and a 5% employee merit-based salary increase. The flat rate and salary increases were made possible by the sale of heavy equipment and other proposed budget line item reductions.
Gibson warned without incremental increases to the tipping fee — which hasn’t increased since fiscal year 2018 — the next several years could see steeper increases.
There was almost no debate about the substance of the budget itself Thursday, but some authority members turned to staff for more clarity on the implications of a financial policy that would take affect Sept. 1.
At the end of August, according to staff, the landfill will reach the volume dictated in the authority’s original member use agreement, at which point excess revenue — which is the amount generated through the accumulation of an additional $10 per ton paid by commercial businesses for landfill use — will be distributed via a different method than it has been in the past.
The situation is made more complicated by ongoing litigation.
Currently, through a lawsuit, Campbell and Lynchburg are seeking a judgment regarding the meaning and usage of “excess revenue” as it pertains to the authority’s original member use agreement adopted in 2008. The differences in interpretation of this phrase have halted millions in funds from being distributed to the two localities.
The excess revenue was designed to compensate Lynchburg and Campbell for their landfill “airspace” they transferred to the authority, according to the lawsuit, and despite its annual distribution for the 10 years prior, a 2-2 vote in September 2019 denied Lynchburg and Campbell County their annual payments of “excess revenue” for fiscal year 2019 and again in fiscal year 2020.
According to staff, after Sept. 1, the excess revenue, or “airspace reserve” — projected to be about $1.2 million in fiscal year 2022 — will be governed by a financial policy adopted by the board several years ago, rather than the member use agreement as it has been until now.
Moving forward, the financial policy states the authority would keep 25% of the excess revenue and Campbell County would receive 75% as the host community.
While under the member use agreement, the distribution must be voted on by the authority, under the financial policy it would not be, Gibson said.
He went on to say regardless of the fate of that money, it won’t affect the fiscal year 2022 budget. It would begin being factored into the budget in fiscal year 2023.
Appomattox County Administrator Susan Adams said she wants written clarification from Hefty as to the financial policy and its implications.
Nelson County Administrator Steve Carter questioned the method of the money’s distribution, and whether excess revenue ultimately was governed by the member use agreement or by the financial policy slated to take effect in September. He also expressed an interest in seeing the $10 differential between commercial and member user tipping fees eliminated, altogether.
Gibson said staff will return in June with a written response from Hefty for the authority.
Following the vote, Campbell County Administrator Frank Rogers, who voted against the budget along with Carter and Adams, said the authority and its staff would have to regroup and figure out what to do from here.
“I’m interested in getting the budget adopted under terms the authority can concur with. I’m happy to meet again whenever staff is ready to revisit it. I’m not sure what it will take to satisfy the authority, because I did not hear any concerns about the substance of the budget proposal in terms of line item expenditures, but more around the definition and implications of existing authority policies,” Rogers said.
“We’ve put staff in a tough position here, because we’ve taken action with no direction that they can take to correct the situation.”