The East Ridge City Council decided at a special meeting on Monday night to eliminate the city's sanitation fee completely and adjust the tax rate to $1.86 per $100 of assessed valuation - a 44-cent increase.
Officials said this would, in effect, be revenue neutral. The council members were adamant that there be no increase in cost to residents of East Ridge. Currently, a $15 fee is billed monthly for a total yearly cost of $180 per household.
This plan would save money for the people that need it the most, said City Manager Tim Gobble.
For example, he had calculated that a home valued at $75,000 would see a savings of $82.50 per year, and a $150,000 home would save $15 per year. Homes with a value of $165,000 and above would pay a little more. A $165,000 home would pay $1.50 more per year and a house valued at $200,000 would pay $40 more. The average price of a house in East Ridge is $118,000 so the majority of households would be saving money.
Voting in favor of eliminating the sanitation fee and raising the property tax were Vice Mayor Larry Sewell and Councilmen Darwin Branum and Jim Bethune. Opposed were Mayor Brent Lambert and Councilman Denny Manning. Councilman Bethune first voted with Mayor Lambert and Councilman Manning, then changed his mind.
The billing and collection of sanitation fees for the city has long been done by Tennessee American Water, but it is stopping the service at the end of October.
At a prior meeting, it had been decided that the city could save money by billing property taxes itself and adding the sanitation fee to that tax bill - doing this, by using existing employees along with seasonal part time help, rather than having Hamilton County’s Trustee Department do it, City Manager Gobble earlier projected that the city would save $70,000 -$100,000 depending on whether the county charged 2 percent or 4 percent.
Billing and collecting taxes is the easy part, said Mr. Gobble in the continuing discussion about property taxes. When tax bills become delinquent is the problem. Hamilton County Trustee Bill Hullander, who was present at the meeting, said that 95 percent of bills attached to a property tax notice are paid. Mr. Gobble added that rate falls to 80-85 percent when a city sends a separate invoice for services. That would mean a $250,000 loss of revenue that East Ridge receives from sanitation fees if the council should decide to send a bill independent of the tax statement.
In addition, there is a lengthy required procedure that gets complicated for collecting delinquent and back taxes. A first notice is mailed, and then a certified letter must be sent at a cost of $5.75, an advertisement has to be placed in a local newspaper, followed by a sheriff that is required to be sent as further notification. A municipality is responsible for the up-front costs but will be repaid when the property is sold after four years. If a delinquent tax attorney becomes involved, the property owner is responsible.
Tax notices go out in September or October, and are scheduled to be printed soon said Mr. Hullander, so a decision would need to be made quickly about who will provide the property tax billing. After a lengthy discussion the council members voted three to two to pay the county to continue billing this service for the city. Mr. Gobble encouraged the councilmen to consider doing their own billing in the future to save money. Voting to allow the trustee to continue collecting the city's taxes were Councilmen Bethune and Manning and Vice Mayor Sewell.
The sanitary fees collected by East Ridge pay for weekly garbage pick-up, bi-weekly pick-up of recyclables, brush collection and bulk collection available on special call. The city can provide these services for $15 a week which is a bargain compared to prices the city got when considering an independent contractor for far fewer services. Waste Management would charge $20 for just garbage pick-up every other week. . The problem now is how to bill the service to property owners and collect payment.
Properties that do not currently have water service do not pay a sanitation fee now. There are 780 vacant lots in the city of East Ridge. according to Mr. Hullander. If the fee is paid by adjusting the tax rate, all property owners will be sharing the support of the sanitation service, and benefit from it. Additionally, local property taxes can be written off on federal income taxes.
The decisions made at the special workshop were for the purpose of helping the city manager and council to build the 2013 budget. The first reading of the proposed budget will be Thursday, and a second reading is required before it is passed.