Should We Go to Once a Week Garbage Pick-Up?

The JIPSD Commissioners voted for a budget that is based upon a shift to one day a week garbage pick up starting in January.

A short power point is on the JIPSD website.   You can see it here.

In my opinion, the key information is the estimated $423,000 in cost savings each year.  

According to the JIPSD staff budget proposal for 2015, solid waste collection costs
$ 1,847,095 per year.

So, shifting to one day a week garbage pick-up would result in  a 22% cost saving each year for solid waste collection.

For the entire JIPSD general fund budget of $ 6,605,855 that is a 6% annual cost saving.

If the JIPSD were to pass this cost saving on to the taxpayers, that would be a 3 mill decrease.

However, annual JIPSD revenues are currently less than expenditures.     According to their budget document, the deficit for 2014-15 will be about $382,000.  

Unlike the Federal government, where a budget deficit means additional borrowing, the JIPSD is spending some of its net fund balances.   The JIPSD is spending some of the money that it has saved up in the past on current operating expenditures.   They have been operating with a relatively large net funds balance.   After looking at the practice of other government entities, they are gradually reducing it to what they consider a more appropriate level.

(The Town is doing the same thing, using the net funds balance we built up over the first three years to pave roads and build sidewalks.   The long lead time before starting construction of this projects is why we didn't spend the money already.    Our target for net fund balance is 15% of operating revenue.   The JIPSD appears to be aiming at 25%.)

Eventually, the JIPSD must balance its operating expenditures and revenues.   Because the JIPSD operating budget is almost entirely funded by property tax, that means increasing its millage.   The JIPSD staff proposed a 25% increase in millage over the next 5 years, from 51.1 to 64.1.  (64.1-51.1)/51.1 is approximately 25%.     In 2020, the operating revenues and expenditures would balance and the net funds balance would have gone from about $3 million down to about $2 million, which is about 25% of the $7.5 million operating budget they plan in 2020.

The point of all of this is to emphasize that rather than passing on the savings and provide a 6% tax cut, the shift from two day a week to one day a week garbage service is aimed at making the tax increases smaller.

The JIPSD Ways and Means Committee voted for a draft budget that shifts from two day a week to one day a week garbage service.   Rather increasing taxes by 25% between now and 2020, this budget only increase taxes about 8%.   The first tax hike would be next year--2 mills and the second would be in 2020, another 2 mills.  

Now, I don't think that going to one day a week will turn a 25% tax increase into an 8% increase.   It seems to me that 25% minus 6% is 19% not 8%.   

Part of the difference is due to other changes the Commissioners made in the budget.  The original proposal was for a 2% cost of living increase, an average 2.5% merit increase, and $300,000 to increase salaries in the fire department so that they would become closer to the average in other area fire departments.   This has changed to a 5% across the board raise plus a 2.5% average merit increase.   (The Town is also increasing salaries next year, but by a more modest 2% cost of living increase.)    The total cost of the new plan to the general fund budget should be less. 

I also believe that the shift from two day to one day allows future tax increases to be pushed beyond the JIPSD's five year planning horizon.

In my view, if the alternative is even more massive and rapid property tax increases, then cost savings are essential.   One day a week is the way to go.

Further I have proposed that the JIPSD transfer the service rights to solid waste collection to the Town and reduce JIPSD taxes in the Town's tax district to 35.4 mills.   This is 2/3 of the 53.1 mills the JIPSD is proposing for next year.    The Town would introduce a 17.7  mill property tax.   That is 1/3 of what the JIPSD is proposing for next year.   I have told them that I would be willing to agree to modest increases in the amount we pay over the next 5 to 7 years.  

This plan is based upon the assumption that the JIPSD will go to one day a week solid waste collection.   It is based upon the JIPSD getting enough money from the Town to pay for one day a week garbage service in the Town.    If the JIPSD Commissioners agree, then the people in the Town would be getting less service, but they would be paying much less tax.

However, there is certainly nothing that would prevent the Town from seeking to negotiate a contract with the JIPSD that would instead have them continue to provide 2 day a week garbage pick-up in the Town.   And while the exact charge would depend on negotiation, it would be more than 17.7 mills, probably more like 22 mills and perhaps as much as 25 mills.  

That would mean that rather than the total millage staying the same in the Town and unincorporated area, with the Town and JIPSD millage in the Town adding up to the JIPSD millage in the unincorporated area, the total millage in the Town would be higher.   The 35.4 mills of the JIPSD plus 22 mills for the Town would add up to 57.4 mills.  

Of course, the Town would be required to provide a LOST tax credit, which would greatly reduce the taxes paid to the Town.   Further, I would propose that we zero out the Town tax credit for the next few years.  Eventually, however, Town would have to collect money from the taxpayer.   These are rough estimates, but for a $200,000 house, we might need to collect $30 per year starting in 2020 if we keep up two day a week service.  (If the Town is reunited, it might be sooner, though the amount would stay about the same.)

Of course, we could negotiate one day a week with the JIPSD at some time in the future, and then would be able to continue to zero out the Town taxes.

This is all conditional on the JIPSD Commissioners agreeing to transfer service rights to the Town so that they can lower their taxes in the Town's tax district.   And then agreeing to provide solid waste collection to the Town on a two day a week basis at a reasonable charge.

If you would like to have the Town continue 2 day a week garbage service, please let me know.    And contact members of Town Council too.   And, most importantly, contact the JIPSD Commissioners--ask them to work with the Town.