Exclusive: Getting Rich on Garbage?

The news hit through a press release sent August 11th by the City of Saginaw announcing that residents would be receiving bills in the mail reflecting a new annual ‘flat fee’ for rubbish removal in the amount of $165.00. 

The move took both residents & the media by surprise, as the last time talk of this surfaced was back in 2009 when City Council attempted to remove the property tax cap and told citizens that if they voted to remove the fee, a total of 4-mils would come off their property tax bill.  Voters declined to lift the property tax freeze, so it appears Council went ahead and approved the new flat fee anyway on May 23rd of this year.

According to the city press release, a total of 3-mils for rubbish removal was taken off this year’s property tax rolls, which is why residents saw a decrease in their tax bill. A majority of residents felt the decrease was the result of lowered property values and thus reduced assessment levels, but apparently this is not the case.

Previously all property in the city, including residential, commercial, industrial, and personal was assessed for rubbish collection. Additionally, property owners also paid an additional fee of $50.00 for rubbish collection, making the City of Saginaw one of the highest taxed communities for these services in the Great Lakes Bay area.

The fee for Rubbish Collection funds the following: curbside trash collection, curbside yard waste & brush pick-up, compost for residents, and the recycling convenience stations located at City Hall and the compost site.  The reasons for this move supposedly are to allow for a “fairer distribution of the cost to provide the services by charging those who use the service.”

According to Tim Morales, Deputy City Manager & Chief Financial Officer for the City, “We believe this is good public policy and the best way to fund rubbish collection because it distributes the cost fairly and equally to residents who use the services. Under the previous funding method & user fee, many property owners paid for rubbish services they did not utilize. Additionally, the previous method created different cost levels for residents because what you paid was dependent upon the taxable value of your property.”

What this translates into is that commercial & business enterprises received a big break (purportedly as most of them utilize private rubbish removal & dumpster services) along with anybody whose taxable property value is higher than $38,333.33 (calculated including the 3 mills and $50 fee), and likely have larger yards producing more yard waste than the average home.  According to the city, the average SEV valuation within the City is $18.392. 

In short, businesses & the wealthier got the tax breaks, opening new questions and topics for debate. Moreover, since when did everybody utilize the same levels of rubbish service?

Doing the Math

According to city officials, there exist a total of 20,467 residential & multiple units billed for rubbish service in the City of Saginaw. At $165.00 a pop this results in a total revenue stream to the city of $3,377,055.

The Mid Michigan Waste Authority is the principal rubbish service provider to the City of Saginaw. Formed in 1991, the MMWA began offering residential waste services in 1995, by servicing 12 municipalities. In the 20 years since their inception, they have grown to service 34 member communities. 

As a public entity, the authority was formed with the goal of providing cost effective, environmentally sound and integrated waste management services to each of its member communities.  The theory behind its establishment was to get better pricing on waste disposal for all involved by spreading the costs across the board and adding bargaining clout when it came time to negotiate residential waste contracts.

According to the Mid Michigan Waste Authority, for calendar year 2010 the City of Saginaw was charged only $1,770,412.54 for all solid waste collection & disposal services provided through the services agreements.

This includes:

1) Standard trash collection of up to 20 qt 33-gallon/50 lbs max. bags/cans, two bulkies per residence per week, one brush bundle per residence per week, proper landfill disposal of all such trash materials.

2) Yard waste collection service April thru November of an unlimited number of 33/gallon/50lb max. cans or yard waste.

3) Single family through quadplex units are allowed under the MMWA program, at one unit count per individual dwelling, so a 4-unit property and a single family home equals one unit count.

At the new fee rate per house-count, it appears that funds raised by this new fee move are approximately $1,606,477.50 more than what the city is being charged by MMWA for the majority of services provided by the fee.

The only items not provided by MMWA consist of brush pick-up and waste composting services for residential yard waste provided by the city, plus operation of the once-monthly trash and recycling drop-off convenience station and yard waste composting facility.  Leaf pick-up collection is down to once per year.

So where is this additional revenue going?  Moreover, isn’t this move actually a tax increase, which thereby would have to be presented as a millage to voters for approval?

According to City Assessor Lou Brown, “The City has the right to set the fee schedule for rubbish independent of the general operating levy. The rubbish millage was removed and the general operating was levied at an appropriate rate of 6.7290, which is authorized under the City Charter. Neither of these require a ‘millage request’ and were approved appropriately through the budget process.

According to Kim Mason from the city’s rubbish division, the total amount of money collected from the new fee is dispersed in this manner:

$1,609,717.00 for rubbish collection & weekly refuse pick-up. (Note: This is $160,695.50 less that the amount reported by MMWA)
$533,770 for City administration, staff, supplies & mailings
$329,172 for the City’s Environmental Improvement program
$510,000 for sanitary landfill disposal
$109.400 for brush collection
$166,375 for recycling
$528.087 for composting
$5,359 for ‘transfers’

“The charges for services include the annual rubbish fee. At the time the budget was prepared and presented to council the estimated household rubbish count was 20,972, thus the estimated revenue was $3,460,380.00,” she explains. “The rest of the revenue is derived from compost site dump fees, trash removal fees, interest and penalties, for a total of $3,791.880.

“As you can see, the revenues and expenditures were balanced as required for council approval. The amount listed in the rubbish collection division includes the MMWA fees for weekly refuse and yard waste collection Disposal costs are included in the Sanitary Landfill division.”

This places the total amount of revenue received by the city at two million dollars more than the amount being billed by the MMWA.

According to one source at the MMWA,  “While I have heard rumblings of this possibility of the city moving to a flat fee over the last several years, we were definitely not on the inside track on the passage of a flat fee to fund the residential curbside services provided by MMWA.”

What About Recycling?

For years residents have asked why the City of Saginaw does not offer curbside recycling. Years ago when the City entered into its contract with MMWA to outsource rubbish services, they were able to reduce a fund deficit of $480,000 and not have to raise fees to residents. But recycling was promised to be part of the package. Moreover, the City sold $460,000 worth of garbage trucks to Waste Management and then added a $50.00 per year solid waste fee on top of it.

When I interviewed MMWA Director Monica Duebbert about this back in 2006 she noted that “The decision to not bring back recycling is totally a city decision and has nothing to do with the Waste Authority. Simply put, its up to the City of Saginaw to decide whether they want to offer this service to residents or not”

“Our contract says that we will pick up recycled curbside items from residents. They told us they weren’t going ahead with the recycling contract because they didn’t have the funding for it, which was a real frustration to the waste authority.”

“They have a millage and are the only community in our service authority that has that extra $50.00 solid waste fee, which allows them to derive $3.5 million in revenue from these sources, but all I can tell you is that we were told they weren’t able to provide curbside recycling.  At the point we were told the city would not be able to provide recycling service, they’ve been charged less than $2 million, so obviously they have other programs and services they wish to provide for from the funds saved in the recycling.”

The Review attempted to discover how many people comprise the departments & divisions in the itemization list published above, along with how much revenue is budgeted from these figures for legacy & pension programs, however did not receive a response prior to our deadline.