A reluctant Council approves trash hikes
Those trash bags may feel a bit heavier this summer, as the City Council earlier this week voted to increase all trash collection rates by 7 percent.
If the new rates are adopted along with next year’s budget, which takes effect July 1, residents and business owners can expect to pay anywhere between $2.38 and $4.34 more every two months for basic collection services, based on 2005 rates.
The new rates include a 5-percent increase for inflation and a 2-percent hike to cover increased operating costs and provide a rainy-day account for financial flexibility in the event of an emergency or dramatic fluctuation in expenses, such as the recent spike in the price of fuel.
While some councilmembers were hesitant to set the new rates without first addressing residents’ concerns over subsidizing commercial trash hauling, the officials unanimously voted in favor of the 7-percent hike, giving analysts in City Hall the numbers they need to draft a budget in time for discussion in late May.
To ease some of their concerns, City Manager Lamont Ewell promised councilmembers his staff would prepare a detailed timeline for the restructuring of rates.
Ewell also said the council could adopt different rates when it approves the final budget for 2006-07, but only if the changes did not affect total revenue collected. If that were the case, the entire budget would need to be revised.
It is expected that the 7-percent increase will stand.
“I don’t disagree that the current system is inequitable,” Ewell said. “I’m only suggesting that during the (budget) workshops (in May, the council) have staff come back in a specified period of time with a more equitable rate structure.”
Ewell said he hoped to have suggestions for a new rate structure by late summer.
Councilmembers Ken Genser and Kevin McKeown voiced the strongest concerns with increasing rates above 5 percent for inflation, suggesting that the public would not be pleased with a rate hike if the council did not have a set schedule for looking into the revision of rates so that commercial collection is no longer subsidized.
“We are asking the residents of the city to shoulder increased bills at a time when we don’t know exactly when the next step is, and at a time when our residents are subsidizing the business collection,” McKeown said. “I know the reasons for that. I want business collection to include recycling and the other services that we do.
“Residents need to know where we are going before we ask for much more money.”
It is believed that multi-family homes are subsidizing commercial to a tune of almost $1 million a year, according to a report City Hall’s consultant on trash hauling, Gershman, Brickner & Bratton Inc., or GBB.
In the coming weeks, the council will sit down with GBB and discuss a new rate structure, along with implementing improvements in efficiency to save money, and the possible franchising of commercial service to private trash haulers, which would bring in more money but may not require other services, such as recycling, be provided.
Mayor Bob Holbrook said he was concerned about the rate increase in light of the need to restructure rates, but supported the 7-percent hike because he didn’t want reserves to “be paper thin.”
The new rates should provide a reserve slightly higher than $500,000 next year, decreasing to $400,000 in fiscal year 2007-08, and be fully exhausted by 2009, according to a city staff report. The reserve would be minimal, but allow for a little flexibility, said Craig Perkins, director of environmental and public works management.
Perkins recommended an 8-percent increase to provide for an operating reserve of $650,000 the first year, and $700,000 in 2008, which would start to build the industry-recommended three-month reserve — $4.5 million — while further review of the trash hauling system is completed.
To balance all rates and ensure services are covered by revenues, GBB said the council could raise single-family rates by 12 percent, lower multi-family rates by 13 percent, and raise commercial rates by 20 percent.
However, since the city is in competition with other trash haulers for commercial business, consultants said raising the rate by 20 percent would lead to a loss in customers.
Originally published in the Santa Monica Daily Press print edition on April 29, 2006. Read the original PDF.