Privatizing Refuse Collection

With the need to invest in new refuse collection equipment, ($12.2 million for 40 trucks), this is the optimum opportunity to consider privatizing (sub-contracting) refuse collection in Toledo. The Mayor was quoted in the Blade Article, 1/30/09 (Blade Article) that there would be an estimated savings of $3.6 million if refuse collection was privatized (sub-contracted). I have long advocated the switch to sub-contracted refuse collection to save cost and used the information provided in the Blade Article and other data to study the effects of such a change. It may be overly optimistic to expect a 31% savings by switching service to the private sector based on the following data.

In an analysis of the 2008 Budget, the actual expenditures from 2004 though 2007 and 2008 budget for the Refuse Department are listed with an estimated per cent of savings if $3.6 million is an accurate amount as quoted by the Mayor:

Per Cent Savings by Privatization
$10,324,386 34.9% 2004 Expenditure
$10,840,653 33.2% 2005 Expenditure
$11,348,331 31.7% 2006 Expenditure
$11,716,547 30.7% 2007 Expenditure
$11,348,181 31.7% 2008 Budget

(The above expenditures include all expenses associated with refuse collection in the 2008 Budget such as: Buildings, Capital, Maintenance, Office Supplies, Salaries and Benefits. See Google spreadsheet “ Toledo Refuse Cost “ for line item expenditures.)

One method of calculating savings is to figure the cost per household; however, there are different calculations by the City of the number of households. Councilman Collins stated in 2008 there were 91,000 households, the City website quotes 114,000 households (Solid Waste Deparment Webpage); therefore, both are shown in the calculation of annual cost per household:

Total Annual Budget 114,000 91,000 Explanation
$11,348,181 $99.55 $124.71 City collection per year per unit.
$7,748,181 $67.97 $85.14 City collection less $3.6 million savings
$23,256,000 $204.00 $255.56 Private at $17 per month
$20,520,000 $180.00 $225.49 Private at $15 per month

A sample of fees for Ohio Cities shows the annual fee for city operated and city sub-contracted service ranges from $64.44 to $200.04 per year. For Privatized collection, the rates range from $120.00 to $210.00 per year. Most of these cities have a more limited program of refuse collection than Toledo.


Private or Contracted Refuse Collection Cost
Per MO//Per Year
Stow OH 16.67 //200.04
Brunswick, OH 13.50 //162.00
Aurora, OH 13.90 //166.80
Mentor, OH 5.37 // 64.44
Parma, OH 7.11 // 85.32

City Collection Rate
Akron OH 10.80 //129.60
Sylvania, OH 10.00 //120.00
Barberton,OH 11.30 //135.60
Canton, OH 12.40 //148.80
Cuyahoga Falls 17.50 //210.00
Warren, OH 14.12 //169.44

Supporting Documents:
Stow OH
Brunswick OH
Sylvania OH
Parma OH Ref Pg 11

These numbers do not support a savings through subcontracting refuse collection in Toledo. However, several questions remain to be answered:

1. Are all expenses associated with refuse collection in Toledo charged to that department?
2. What type of service was included in the bids received by the Mayor?
3. How many households are in Toledo?
4. What is the basis for the claim of a $3.6 million savings quoted by the Mayor?
5. In the information received, what was the total annual and monthly fee quoted to the Mayor?

Is it time to privatize refuse collection and can it be successful? In reviewing the data, one would conclude it would be cost effect to keep the current form of service even if we do spend the $12.1 million for new equipment; however, a thorough study is crucial.

City Council must be diligent to ensure accurate data is used to make an informed decision. If the Administration is not forthcoming in providing all necessary detail to make an informed decision, Council must demand this information so they can analyze and justify any decision. If the above information is complete and accurate, Toledo will be better served by keeping the current form of refuse collection.

Vacant Property Registry Folly

Vacant Property Registry
What is the purpose of this registry?
What is to be accomplished by the registry?

If I understand the purpose of the legislation, it is to provide easy access to the name and address of the owners of vacant properties so they can be billed for city work to maintain the property if the owner does not.

I had a discussion with a councilperson about this and it became quite intense. If I own a home, maintain it, clean it, keep it in repair, mow the grass, shovel the walks in the winter, pay the taxes… it is ABSOLUTELY none of the business of this or any other government entity whether it is or is not inhabited. If I am in compliance with the laws on maintaining MY property, it is ABSOLUTELY none of the business of this or any other government entity whether it is or is not inhabited

There are already regulations for those who have vacant property which is in decay, not maintained and condemned. If the city does maintain the grounds, condemns the building and then demolishes the home, the owner is billed.

We are assured there are many “exclusions” to the registry, but we have to request the exclusion after registering the property. The property is then on a registry visible to anyone who requests the information. What happened to the term “private property?”

When I asked the council person what will be accomplished when the registry is put into effect, it was explained it will help the city know how many vacant homes exist in Toledo to help determine revenues for the city and help control the dilapidated properties in Central city. Are you aware the City owns almost 600 vacant properties which are 30' frontage, many in Central City? Will they register these properties?

My point to all on council is this: those who do not maintain their properties are not going to register the properties. When I offered this opinion to the councilperson, I asked what ultimately would be accomplished and the response was more fees would build up. What good will that do when the City is not proactive enough to collect the fees currently owed?

The responsible residents will once again bear the brunt of city inefficiencies by the requirement to report to a city that already has proven they do not follow through with the regulations. It will be randomly and inefficiently be applied and undoubtedly another person will be needed to maintain this registry and answer all the requests for exclusions. As government is best at creating, this is another quagmire in the political arena of Toledo politics designed to appease the politically connected CDC’s..

If in fact there is close to $3,000,000 in unpaid fees against vacant and abandoned property the department responsible for collecting the unpaid fees should be held accountable, not create another regulation or registry which will be impossible to maintain.

Council should require a report with:
A list of properties with fees already assessed which they have not been able to collect.
The amount owned against each property
The name and last know address of the owner of the property
The efforts taken to collect the owned fines

It is extremely disappointing to see this Council continue to punish with additional regulations the citizens who pay the bills and vote them into office.

Police Auction

The Blade reports on the auction of vehicles by the Police Department Blade Article

94 abandoned vehicles raised $128,075 (goes to the General Fund)
9 forfeited vehicles brought in $11,925 (goes to the Law Enforcement Trust Fund)

What is the Law Enforcement Trust Fund? What does it Fund? If you know, please blog.

Refuse Fee - 2% of the General Budget

Blade Opinion

I'm amazed at the time and attention given the "Refuse Fee". For a fee which generates only 2% of the Revenue for the General Fund of the budget, it seems to be receiving 75% of the energy the Council, Administration and Blade coverage of the budget. We hear virtually nothing of any plans to reduce spending, freeze wages, require 8 hours work for 8 hours pay... it's just "give me more money" through the refuse "fee". Why not? After all, it's a cash cow for the city as there are no restrictions on how high they can raise the fee to generate revenue to pay for exorbitant expenditures. For the 4.9 million in projected revenue, Council could do an across the board cut of .09% over the $545 million budget rather than push this unnecessary fee.

I have this to offer regarding the Blade editorial:
"The Blade position regarding the city budget is curious given the fact they shut out their employees just recently to force concessions on wages, benefits, employee hours, etc. Not only did the Blade receive numerous concessions, they did so without affecting service. Why doesn’t the Blade as vigorously advocate for the taxpayers by holding the Administration and Council to the same standards and demand similar concessions. Could the Blade remain viable with 28% retirement payments, 0 in medical benefit copay, employees working 4 hours a day though paid for 8 hours, 15 paid holidays, etc.? I doubt it! But then, it is much easier to spend the money of others. This continued position of tax and spend on the part of the Blade is both disappointing and irresponsible as these contracts are crippling the city."

2008 Toledo Budget, Grants

It may be nothing to consider, but I would like additional information about State and Federal Grants. In 2004, 2005, and 2006, the City of Toledo received between $25,000,000 and $45,000,000 (2006) in State and Federal Grants. In 2007 and 2008, the budget was $300,000 (as shown in the budget submitted for 2007 and 2008). One explanation for 2007 is that the funds are applied to the account once received and they are then applied to the appropriate account. I checked back to the 2007 budget and it showed $45,000,000 for 2006, so that must not always be the case.

So. what is happening here. A couple possibilities:
1. The funds are budgeted on a different line item under a different heading and transfered when they are received and the transfer was not accomplished for 2007 in November when the budget was presented for 2008.

2. The City of Toledo only will receive $300,000 in State and Federal Grants for 2007 and 2008.

3. The City of Toledo did not budget for revenue of these amounts and will end up in a surplus when they are received in 2007 and 2008.

If #1 is correct, I would like to know which line items the amounts are budgeted so we have a real sense of the expected revenues for State and Federal Grants.

If #2 is correct, are we missing available money? Why a drop of $44,700,000 in Grant money for 2007 and 2008.

If #3 is correct, then we would have a surplus of over $30,000,000 not a deficit.

Because I have filed a lawsuit against the City of Toledo, I am not allowed to request this information. Hopefully, someone else will.

If you would like to review the information, it is linked here: GRANTS

2008 Toledo Budget

In the Links section of this blog is a link to the budget on an Excel spreadsheet which can be downloaded and used for your own analysis of the budget. Help yourself!

Commentary #5 Toledo Budget 2008, Revenue

Revenue Analysis
Are revenue items missing in the budget for 2008? As I reviewed the Revenue section, it seemed there were gaps which may be of concern and the following information and analysis is offered for consideration.

The linked spreadsheet is an analysis of the expected revenue as reported by the Administration. It is sorted by the greatest actual dollars by Organization in 2006 compared to the expected dollars by Organization in 2008. Many of the accounts had one or two items with a variance in the detail, while others (such as "Treasury") had great variations. Next to the dollar amounts is a brief explanation of the cause for the increase or decrease in the revenue with the exception of Taxation.

In the Detail for taxation, no allowance for refunds to businesses or individuals was included in the model. This would seem to leave the City open for unfunded costs since the amount of refunds were significant 2004: -1,089,790; 2005: -1,124,086; 2006: -1,386,489; 2007 & 2008 -0-. Is it possible there were no refunds in 2007 and none expected in 2008?

Treasury is a total different situation as there are numerous differences between 2006 and 2008 by Account Description. The detail begins on Row 47.

It has been well documented that Federal and State Grants have declined, but the difference in Grants between 2006 and expected in 2008 is staggering. Have we missed opportunities or has the availability of Grant money really dissolved? The comparison is referenced beginning with Row 124 which shows:

GRANTS
Federal Grants $18,777,186 (2006) (2008 - "0")
State Grants $18,122,466 (2006) (2008 - "0")
State Grants/Federal Fnds $8,676,909 (2006); $300,451 (2008)
TOTAL GRANT REVENUE $45,576,560 (2006); $300,451 (2008)

Commentary #3 on 2008 Toledo City Budget -AMBULANCE SERVICE

In 2007, it was decided by Council to approve the take over of the private industry Ambulance Service to "enhance" revenue. On the surface, it was estimated the take over could generate $1.2 million per year. Toledo Blade article


As it would begin in July of 2007, it was estimated the revenue generated would be approximately $600,000. There was no consideration in the model to include the cost of labor for the service as the fireman "They agreed the department could staff the five basic life support ambulances with current firefighters". In reviewing the budget, with benefits, wages and pension, the Toledo paramedics who would staff the ambulances earn an average of $45.00 per hour.

To determine the true cost and net revenue, the cost of labor must be considered in addition to the loss of revenue which would have been generated through taxes if the services had been performed by the private sector. The model used to determine the gross revenue and total profit of this service should include:

# of Runs
Total manhours for runs
Total $ Billed
Total $ Received
Amount of revenue lost from private sector through fees and taxes
Cost of Vehicles
# of Vehicles leased
Any maintenance costs
Manhours to maintain
(clean, fuel, restock supplies, etc)
Lease fee
Were additional fire fighters called to report to fight a fire because the on-duty men were on an ambulance run and not available?
If so... additional cost for this coverage.

Commentary #2 Toledo Budget 2008 Payroll

In an attempt to determine salaries and benefits for all city employees, I went through the budget and created the classification “payroll” and then sub-accounts to describe the expense.
Payroll analysis

The following is a summary of the wage and benefits for the Employees of the City of Toledo which are projected for 2008:

2978 Estimated # of employees for 2008
$51,711 Average wage
$29,806 Average benefits
$81,517 Total average wages and benefits
$242,757,173 Total estimated wages and benefits 2008

The 3 major increases are for Base Salaries, 9%, Retirement Contributions by the City, 18.5%, and Medical Insurance, 22.9%. There is also 2.9 million allotted for “severance” (63.7%) for 2008. It would be an alert City Council who would seek a benchmark of the private sector to determine comparable wage and benefit packages for comparison to use as a model in the next negotiations with the unions.

With an increase in medical insurance of almost $7,000,000 dollars, it is necessary to expect city employees to pay a portion of the benefits. At $200 per month (on average), almost $7,000,000 in contributions to the plan would be generated. Additionally, co-pay for doctor visits and prescription drugs of $15 to $20 would be appropriate. The study of private industry would help in the decision on how to manage the benefits in the future.

The retirement benefit package needs to be revised, we cannot continue paying 28% towards the Pers program.

Why is Personnel Services Reimbursement cut by $731,000 + ?

In looking at the negatives on these last categories, are we confident the estimates are accurate? For example, why a negative on “compensated absences” unless it was applied to a different line item; if so, what line item has absorbed this cost; if not, an explanation is warranted.

It is obvious the payroll budget has outpaced the revenue of the city and the private sector, it must be amended.

Commentary on the 2008 Toledo City Budget

Once again voters will be asked to renew the ¾% “temporary tax”. This ¾% tax was originally passed on June 6, 1982. At that time, refuse collection had been cut in the summer to every other week, was limited to quantity allowed at the line and no white goods (appliances). Additionally, 1600 city jobs had been cut, the police force was at 615 and they had lost all of the 86 civilian staff. Vehicles were in disrepair, the parks were closed and the pools were not opening. The tax was expected to generate $22 million (link to Blade article http://docs.google.com/Doc?id=dd7thkjj_2hgwbxvtb). Now, 26 years later, we are in the same predicament.

In 1982, Councilman, Donna Owens, believed the tax could be sold to the voters because it was temporary (a ½% permanent increase was soundly defeated the year before) she commented about the possibility of renewing the tax in the future stating: “and they have the chance to say so at the polls if they do not like the way the additional money is spent”.

The language of the levy guaranteed the revenue would “funnel the proceeds in 3 areas:

• ¼% police and fire for hiring 115 police officers and 32 fire fighters and for upgrading equipment (especially fire equipment)
• ¼% to the general fund for restoration of weekly garbage collection, reopening the parks and restoration of cutbacks in the health department.
• ¼% for capital improvements fund for repayment and rescheduling the city’s debts, resurfacing streets, restoration of storm sewers and demolition of vacant and vandalized houses.

Over the past years, the wording has been diluted until it no longer specifically covers refuse collection which has gone unnoticed by the majority of voters. Ask your neighbors “what is to be paid for by the ¾% temporary tax?” Most will say, police, fire and refuse collection. Instead per the Municipal code, it covers:

· one-third (1/3) shall remain in the General Fund for police, fire and other Safety Department responsibilities,

· one-half (1/2) of said increase shall remain in the General Fund,

· one-sixth (1/6) of the said increase shall be allocated to the Capital Improvements Fund.

With this wording the city is no longer bound to provide the refuse service we expected when we voted for the levy in 2004.

How is the money being allocated? Our politicians have spent 26 years “negotiating” unsustainable contracts with the Unions representing the city employees. We will not survive as a community if our City leaders continue on this path of unrealistic wage and benefit packages. How did this come about as we entrusted our taxes to the politicians of Toledo?

The Blade article last week which covered the Mayor’s fundraiser paints a picture of what is to come when they reported that in attendance at the $500 per ticket fundraiser were “all the union chiefs”. Blade article

Backroom deals are cut with the union chiefs to garner endorsements, contributions and campaign workers for the candidate who will offer the best package if elected. The result over the past years has been an exploitation of the generosity of the electorate who continues to offer up additional taxes to pay for these agreements. Voters are not naïve and accept this is “politics as usual” accepting the status quo; however, it has gone too far and needs to be remedied.

The challenge for those currently in office is to understand we are at a critical turning point in Toledo politics. They must set aside self-interest and concern for reelection with the understanding that the funds to finance the current contracts do not exist and voters are financially unable to continue digging deeper to finance such folly.

Commentary # 2 to follow.