Tax hike,
user fees,
cost cuts
all debated

A city advisory panel talks
trash as it studies ways to
balance the budget

By Craig Gima
Star-Bulletin

Should people who live in expensive homes pay more for garbage collection through their property taxes -- or should all single-family homeowners be assessed the same flat fee?

That's a question being discussed by the Mayor Jeremy Harris' blue-ribbon advisory committee on property taxes, which is trying to find ways to deal with an anticipated $130 million operating budget shortfall.

A flat fee would amount to an estimated $8 a month for once-a-week pickup and about $16 if garbage is collected twice a week, Chief Budget Officer Malcolm Tom told the committee yesterday.

Alternatively, the cost of trash collection could be covered by raising property taxes for single-family homeowners by an estimated 23 percent, he said.

The advantage to a property tax increase is that it would be deductible on state and federal income taxes, while a garbage fee is not deductible, said Wayne Aoki, a partner with Ernst & Young and a member of the committee.

"I would prefer to see property tax rates go up than hide it in user fees and gasoline taxes," he said. "User fees are disproportionate penalties."

People who live in apartments and condominiums now help pay for garbage collection for single-family homes through their property taxes, even though these buildings must pay private companies to collect their garbage.

Committee members noted that charging fees for garbage collection could help the city raise revenues and take the burden off of apartment and condo dwellers.

But because a property tax increase would be tied to tax rates, those who live in more expensive homes would pay more for collection.

Committee members also suggested the city look harder at cutting expenses by 5 to 10 percent to deal with the shortfall, rather than raising taxes.

They also continued discussion on a recommendation to eliminate the additional $20,000 exemption on assessments now given to homeowners between the ages of 55 and 59, and to reduce the exemption for those over 60.

Notices for the exemption have already gone out, and city tax officials said any changes in the law could not take effect until next year.

The officials also told the committee that about 60,000 homeowners over 55 use the exemption. More than 33,000 are over 70 years of age and qualify for a $120,000 exemption.

Committee members suggested that number may be high and questioned whether some of those people may have passed the property on to their children or grandchildren and may no longer qualify for the additional homeowners exemption.

Other ideas discussed included:

Stimulating the economy by giving a five-year graduated tax exemption for new buildings.

Reducing the number of tax rates imposed by the city from seven to two over the next two years, and possibly going to a single tax rate in five years.

Asking the state Legislature to impose a franchise tax on telephone companies.

Asking the Legislature to eliminate the general excise tax for counties.

The committee will meet again Tuesday to discuss their recommendations. Final recommendations will be passed on to the mayor.