Free trash collection has long been a perk of living in the city of Newark, but that could soon change if city council signs off on a plan to implement a monthly refuse fee.
On Monday, City Manager Tom Coleman and Finance Director David Del Grande proposed charging each household a monthly fee of approximately $25 – equivalent to $300 per year – to pay for trash, recycling and yard waste pickup.
Each year, the city spends $2 million on refuse collection. However, approximately 20 percent of residents’ property tax bills aren’t high enough to cover their share of the cost of garbage collection, let alone the other city services residents receive.
“It’s all about equity and fairness,” Del Grande said.
Coleman said that even with the new fee, Newarkers would be paying less than residents in unincorporated areas that use private refuse companies.
The proposal comes as the city faces a $1.9 million budget shortfall, an even larger gap than estimated in August.
As usual, the biggest driver of the increase in expenses is personnel costs, which are up 5.6 percent, or $1.9 million over this year. That includes contractually obligated salary increases, rising health care costs and increased pension obligations.
Meanwhile, the closure of the Christiana Towers means the city is losing electric and water sales, which the city relies on for revenue due to the University of Delaware’s tax-exempt status. UD’s decision to take over the University Courtyard Apartments is also costing the city approximately $77,000 in tax revenue.
Coleman said that implementing a refuse fee would offset the need for large tax and fee increases.
Currently, Coleman’s 2020 budget includes a 2.1 percent property tax hike, a 1.25 percent water rate increase and a 0.5 percent sewer rate increase – all increases that were previously planned as a result of the capital referendum approved by voters in June 2018.
However, without a refuse fee, that would increase to a 9.3 percent tax hike, 5.8 percent water rate increase and 4.7 percent sewer rate increase.
The refuse fee – which will be voted on with the rest of the 2020 budget on Nov. 4 – will be controversial, council members acknowledged.
“This will be a big topic in the city tomorrow, I’m sure,” Councilman Jason Lawhorn said. “It will be interesting to hear the feedback we get from residents. Anytime you increase costs, that's going to be a big deal.”
Councilwoman Jen Wallace pointed out that in 2015, the city proposed outsourcing refuse collection to a private hauler – a move that would have saved $700,000 each year – but scrapped the plan after an uproar from residents.
“The public did not want that,” Wallace said. “If we’re going to continue with the current way we handle refuse, we need to figure out a way to pay for it.”
She said the issue is one of equitability.
“People who are generally benefiting from the service aren’t necessarily paying their fair share,” she said.
However, Councilwoman Sharon Hughes said the fee would be hard on her constituents, many of whom are seniors on fixed incomes.
“$25 is too high in my opinion,” Hughes said.
Commercial properties in Newark don’t receive refuse service from the city, but Councilman Chris Hamilton said the city should charge downtown businesses for the cost of picking up trash from the city’s trash cans that line Main Street.
"It will be hard for me to go to my residents and say, ‘Hey guess what, you're paying for trash pickup, but those businesses on Main Street, nobody pays for that except for us,’” Hamilton said.
Renewable energy initiative would raise electric bills
Another component of the budget sure to generate debate is a proposal to raise Newarkers’ electric bills as part of a renewable energy initiative.
Currently, 16.5 percent of the electricity Newark purchases and resells to residents comes from renewable sources such as solar and wind.
Coleman proposed increasing that to 100 percent – a move that would cost the average resident an additional $6.75 per month or $81 per year.
Council balked at that and instead asked him to amend the proposal to 50 percent renewable, which would reduce the additional charge to $2.68 per month or $32 per year.
The money would go toward purchasing renewable energy credits from entities that install wind or solar generation facilities.
"Think of it like this. All the power plants and solar generation facilities and windmills are pouring their power into a bathtub full of power. You can't say, 'that one is green' once it goes into the grid,” Coleman explained. “The way you bookkeep and track which one is green is with that piece of paper that goes along with it, the renewable energy credit.”
Wallace, the only council member to support going 100 percent renewable, said the green energy would benefit all Newarkers.
“I've got an overwhelming amount of people in my district who want to participate in some sort of green energy but they can't do it themselves,” she said. “On my side of town, there's a lot of trees. Nobody's adding solar.”
Notably, the extra fees would apply to residents but not industrial customers or to the University of Delaware, which has a separate electricity purchase agreement with the city.
"With our large industrial customers, some of those companies have sustainability goals and they may be looking for an option like this, but I do have concerns forcing an option like this on someone who's using a lot of power, like a Chemours or a Dow or one of those companies,” Coleman said. “With those, it might be beneficial to make it optional."
The city could make it optional for residents as well, but that would cause administrative hassles, he added.