Residents could pay more for recycling on their monthly utility bill by the summer.

A new monthly surcharge is needed to cover processing costs that went up in March, City Operations Director Levi Lloyd told the Durango City Council on Tuesday.

Residents could pay a recycling surcharge of $2.69 per month to cover the expense, he said.

Costs to process recycling are rising because last year China stopped accepting recyclable materials with higher rates of contamination and that has flooded the global market.

“China essentially said they did not want to be the landfill for the rest of the world,” Lloyd said.

The city sends its single-stream recycling to Friedman Recycling in Albuquerque for processing, and the company informed city staff in March it was increasing its processing rates by $25 per ton. Since the market was flooded with material, the company must store tons of recyclables and spend more time marketing material, Lloyd said.

The city has also stopped earning money on its recyclable materials as a result of China’s ban on contaminated shipments.

If the city doesn’t add the surcharge, in 12 months it could face a $180,000 budget shortfall, Lloyd said.

He pitched the council on a surcharge because it could be easily rescinded when the market for recyclables improves.

Councilor Sweetie Marbury asked Lloyd if the city could store its own materials.

The city doesn’t have the space and there are land-use code restrictions that would prevent storing it, Lloyd and City Manager Ron LeBlanc said.

The city’s single-stream recycling program keeps about 30 percent of residential and commercial waste out of the landfill.

Marbury also asked Lloyd to research how Farmington is dealing with the changed market.

“I am trying to look at some ways to save some money,” she said.

Lloyd said he will bring back more information to the council, but based on his original research, Friedman is offering the city the best deal.

“They have been up front with us about everything,” he said.

The city could sort its own recyclables instead of baling all kinds of material together, but that would require more than $1 million in new equipment and a long transition process. Lloyd said.

Friedman Recycling is also cautioning Durango and other suppliers not to make wholesale changes because the market could improve, he said.

The city may also have to stop accepting certain kinds of plastics and chipboard, which is used in cereal boxes because there is not a good market for these products, he said.

mshinn@durangoherald.com