Increasingly, municipal governments are faced with dramatic increases in funding needs for essential services. One area that has had a substantial impact on local budgets is solid waste management. The costs of solid waste management have become a much larger part of the municipal budget, due to increased federal and state environmental requirements, expansion of programs· and services, and the need to create new capacity or replace aged facilities and equipment.

In order to assure cost recovery and a more equitable distribution of costs of solid waste services, and to better understand, manage, and report their costs, many municipalities have removed their solid waste operations from the general fund, where the cost of waste management is often bundled with other general municipal service costs, and started accounting for solid waste management services as a separate "enterprise fund," with its own capital program and system of fees and charges.

An enterprise· fund for governmental activities is a self-sustaining cost center that operates similar to private business operations. The primary purpose of establishing the fund is to isolate all solid waste revenues and expenditures for purposes of accountability. Costs are clearly identified and recovered, and citizens can better understand the full cost of the solid waste management system. Enterprise funds have been successfully applied for many years in water and wastewater systems.

Under an enterprise fund, all system revenues are deposited in the enterprise fund and pledged to the payment of system obligations, including administration, debt service, operations, maintenance, community information, and other direct and indirect costs. The accounting of an enterprise fund is segregated from all other municipal obligations and operations, including the general fund.