GARBAGE FEE:
QUESTIONS AND ANSWERS
with
Stephen Mayo and Charles Strome III
- What is the garbage fee?
The garbage fee is a fixed-dollar amount per residential unit used to cover the cost of collecting garbage and other refuse from residential units. It was $66 per residential unit. This year, it was raised to $233 per residential unit. Qualifying seniors still pay the reduced fee of $30 per residential unit.
- What is the difference between a fee and a tax?
A fee is a voluntary payment by someone who benefits from the good or service, in this case, garbage collection. A tax is an involuntary levy paid by all taxpayers regardless of benefit.
- Why was not some pro rata accommodation made for multi-family dwellings?
The residential refuse fee was initiated in 2004 and is designed to be as fair as possible without creating an administrative (e.g., cost to collect) burden on the city.
- Several of the residents balked at this idea of fairness. They did not think it fair of the city to call something a fee (as opposed to a tax) when it is levied on all residential units whether or not the units are in use. Since all homeowners must pay the fee regardless of residential use, they see it as a tax and not a fee and, as a tax, it should be levied as such so that they can deduct it on their federal and state tax returns. What is the answer?
Mr. Strome: "Under state law, the city can either collect a fee or levy taxes for this purpose. I understand the argument the residents are making. However, as city manager, I do not have the authority to raise taxes above the state imposed tax cap – that can be done only by the legislative body, City Council (the Mayor and six District Council representatives). That is why it was proposed as a fee. The City Council could have amended the budget and levied the garbage fee as a tax, but it chose not to amend. It should be noted that places like the Avalon properties pay the fee for each unit and the City does not collect their garbage – they use a private carter."
- Do businesses pay the garbage fee? If not, why not? Does the City's membership in the BID prevent it from charging fees to businesses? What, if anything, does prevent the City from charging fees to businesses?
The garbage fee is ONLY for residential properties. It is not for commercial properties. Owners of commercial properties pay separately for their own garbage and refuse collection. They either pay a fee to the City (become a customer of the City) or they pay a charge to a private carting company.
- Do not-for-profit organizations pay the garbage fee? Is so at what rate? If not, why not?
The garbage fee is ONLY for residential properties. If the property is residential, the fee is paid. If it is not residential, no fee is paid. Dormitories are considered to be commercial properties under the City's Zoning Code and, like commercial entities, pay either a fee to the City (become a customer of the City) or a charge to a private carting company. New York State tax laws exempt not-for-profit organizations from paying property taxes.
- Can not-for-profit organizations be charged any category of fee(s)? If so, what?
Not-for-profit organizations pay a county sewer district tax. This is the only allowable tax under NYS law.
- Are there any restrictions on the types of fees or dollar amounts that the City can charge?
Cities are under all sorts of restrictions based on state law. Mr. Strome believes that New Rochelle cannot charge a public safety fee.
- The supplemental notes and introductory message of the 2012 budget state that the garbage fee generates more revenue than what is required for New Rochelle's municipal refuse/recycling operations. Why was the fee imposed at all? How was the increase from $66 to $233 for each residential unit determined? E.g., why not $234 or $232 and why per residential unit and not per commercial unit?
By law, the fee revenue can be less than the cost of the service, but it can never be more. At $66 per residential unit, the fee revenue was less than the cost of the service. At $233 per residential unit, the fee revenue collected is equal to the cost of the service. The per unit fee was determined by dividing the cost of residential refuse collection and disposal by the number of residential units in the city with a small adjustment to account for the reduced rate for qualifying seniors. The result of that calculation is $233 per residential unit. If the fee increase were not adopted, a property tax increase of $4.2 million would have been necessary to raise the revenue.
- Who decided not to raise the 2% cap? Did the New Rochelle Department of Finance (DOF) or the City Manager's office request an increase in the 2% cap? Or did City Council members decide not to raise the 2% cap?
Under the state legislation creating the cap, the action to exceed it is vested in the legislative body, City Council, not the executive body. As a result, neither Howard Rattner, the Finance Commissioner, or Mr. Strome was authorized to propose a budget exceeding the cap. The decision not to exceed the cap was made by the City Council.
- With an increasing amount of household material diverted from the "solid waste" stream (paid for with "tipping fees" to public/private contractors) and re-directed to public or private processors (free), shouldn't DPW expenses be diminishing (or at least increasing at a slower rate than the rate of increase of the city budget as a whole)? And if this is so, then why the need for a new departmental subsidy?
Mr. Strome: "I am not sure your premise is correct because New Rochelle's recycling rates have been fairly flat. The reason the fee increase was larger than most expected is because the previous fee was not covering the complete cost of residential refuse collection and disposal. When the fee was initiated in 2004, the fee level was set at $157 per residential unit. It was initiated because, at that time, the City was under its own individual tax cap imposed by the State. When that tax cap was subsequently removed, the City Council reduced the fee for three years by 20% per year. So, the $66 per unit fee was not even coming close to covering the cost of residential refuse collection. The true number in the growth of the cost of the service can be seen in the fee level of $157 per unit in 2004, which covered the cost of the service, to $233 per unit in 2012 (8 year period), an average increase of $9.50 per year. The costs for sanitation are not increasing more than other services and like most of our personnel costs, the major driver is the pension payment of which the city has no control. The number of sanitation workers has essentially been flat over that time period (44 workers in the bureau)."
- Did the DOF, the DPW, or the City Manager's office consider any of the following alternative cost-cutting measures before recommending an increase in the garbage fee:
- private bagging of leaves? Yes, private bagging of leaves was considered but not adopted. Private bagging would have saved $200,000; the refuse fee raised $4 million.
- reductions in acquisition of certain capital equipment? This has been done for several years. New Rochelle has no general fund allocation to the capital budget. It is bonded. New Rochelle's capital budget, for a City its size, is significantly underfunded, and not investing in the city's infrastructure will cause further problems down the road.
- elimination of mayor's full-time assistant and other executive-branch staff? The Mayors Office is not in the executive branch of the City government. Under New Rochelle's form of government, the Mayor is the head of the legislative branch and the City Manager is the head of the executive branch. All employees of the City actually report to the City Manager with the exception of the City Manager, who reports to the City Council, the Mayor's Assistant, who is hired by and reports to the Mayor, and City Clerk, who is appointed by and reports to the City Council). So, the question about the Mayor's Assistant should be directed to the Mayor. The only other executive staff in the City Manager's office is the Assistant City Manager and two support staff. The City Manager's office has a very lean staff and, if you compare it to other smaller local governments, it is smaller. (Scarsdale, for example, has 5 Assistant Village Managers and more than 2 support staff).
- cutting the Mayor and Council member's salaries? This issue is for the Mayor and City Council.
- elimination of lifetime health benefits for any mayor or Council member who services (I believe) 5 years? This issue is the Mayor and City Council.
- Friday or bi-monthly furloughs of non-essential personnel? Other than commissioners and other non–reps, furloughs would have to be negotiated in collective bargaining.
- Who decides which executive and legislative staff members get what perks, like company cars? What about eliminating all of these perks, especially for the Mayor, who is only a part-time employee? If not, why not? If so, what was the reason for not doing it?
Mr. Strome: "I am not sure what perks they are referring to. I, as City Manager, decide what perks staff members get and we have very few – a few cars, a few cell phones. The only people who get company cars are employees who are on call 24 hours a day, 7 days a week, such as the Police Commissioner, Fire Commissioner, and a handful of others. Right now we only have nine such employees (unlike other cities around here where there are more than 50 take home cars). It is not efficient to pay the Fire Commissioner mileage to use his personal car and reimburse him for the damage to the car that is caused by the installation of all the radio equipment he needs to communicate with his department. I receive a car and it is part of my employment contract with the City. I am not involved in the Mayor receiving a car, but I can tell you that every Mayor we have had in my 30 years in New Rochelle has had a car. It is nothing new. The City pays for a few cell phones, but it does not have a lot of these either. However, even if we got rid of all the cars and cell phones, we are talking about nickels and dimes. It does not solve any problems. A fair look at the matter will show that our executive staff is compensated significantly less than similar positions in other communities and it is the only employee group who has sacrificed over the past three years. They have had no salary increases since 2009."
- Does New Rochelle have a system for measuring performance by department and, say, applying the benefits of improved methods in one department to enhance service(s) elsewhere? For example, DPW workers are generally finished with refuse/recycling pickups before 12 noon. Is there a way to capitalize on this efficiency and use their services elsewhere, e.g., repairing pot holes, cleaning up the parks, mowing open fields, etc. in other sections and departments? How substitutable (amorphous, fungible) is the labor across departments?
New Rochelle reviews and measures performance every year. The cited example is commonly referred to and is not unique to New Rochelle. The City operates under New York State Civil Service Law – so positions have certain specifications and job duties. As a result, sanitation workers have certain responsibilities and under civil service law those are the duties they perform. They work on an incentive schedule so that when they finish their route, their day is done. This is common practice in this area.
- Do you (Mr. Strome) foresee any other fees in New Rochelle's future?
It is simple mathematics – if the state tax cap stays in place and the City Council chooses to abide by the cap, the choices are clear – either dramatically cut services or find new fees. However, there are only so many fees, so eventually it comes down to taxes versus service cuts. No matter what some people say – most of our money is spent on police, fire, and public works and, without cuts to those services, New Rochelle will never have enough to balance the budget with all the continuing state mandates.
- Any other comments on the garbage fee or the budget?
According to Mr. Strome, New Rochelle has done a lot to streamline the City organization and cut costs. It has reduced the workforce, through attrition, by more than 10% in the last 4 years, non-union employees have had their salaries frozen for three years in a row, employees have been contributing to their health insurance premiums (18%) for over 30 years. The fact is that the State is passing policies and issuing unfunded mandates that make it almost impossible for municipalities to survive. Despite all that, one should remember that the City portion of the tax bill is 18%. As a result, if the average tax bill is $18,000 – the city portion is $3,240. Even after adding on the refuse fee, most fair minded people would admit that $3,240 a year is a reasonable price to pay for a professional police department, a professional fire department, public works services, parks and recreation and all the other City services.
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