What you pay depends on where you live

Like many residents of Augusta, Chess and Elfriede Howard have city trash service.

Trucks come by their house on Kirk Place twice each week for household garbage, yard waste and recycling. The service costs them $276 per year.

Their next-door neighbor, Charleen Tinley, pays less than half of that. Their houses have about the same value. The same trucks pick up their trash, but Mrs. Tinley pays only about $130 per year.

That's because what you pay for trash service in Augusta depends on where you live. Mrs. Tinley's house sits just inside the old city limits. The Howards' house is on the other side of the line. Those few feet of distance makes a $146 difference to Mrs. Tinley.

She is not alone.

An analysis of property tax bills by The Augusta Chronicle has determined that more than 90 percent of urban homeowners pay less than the $276 fee charged in the suburbs. About 70 percent pay less than half of that.

On the other hand, there are some who pay more. At least 5 percent of urban home-owners pay more than $276, and some pay double or even triple that amount. At least nine homeowners pay more than $1,000 per year for city trash service.

The reason behind the inequity is the dual system Augusta uses to charge property owners for trash service. Some pay a flat fee, while others pay a combination of tax and fees that results in situations such as the one on Kirk Place.

It might not sound fair, but that's how the system works. So far, city officials have been unable or unwilling to fix it.

"That's absurd," Commissioner Joe Bowles said when he heard about the difference between the Kirk Place trash bills, both of which originate from his district.

"The whole thing is confusing," he said. "We need to figure out a way to charge everyone the same amount."

Mr. Bowles says that instead of billing everyone separately, all property owners should pay the same flat fee, added to their taxes as it is now in the suburban area.

His suggestion, however, is just one idea among many on how to address Augusta's trash service problem.

Some want the trash fee off the tax bill altogether. Others have suggested they get rid of flat fees and pay for the trash service with a higher mill rate countywide. Others think adding the fee to residential water bills would be an equitable solution.

Augusta's Solid Waste Director Mark Johnson has proposed another idea. He wants to bill property owners who receive the trash service separately - another user fee. Mr. Johnson's proposal, however, stalled at the Dec. 19 commission meeting.

Commissioner Andy Cheek argued in favor of approving the separate billing system, but he was opposed by Commissioner Jerry Brigham and then-Mayor Pro Tem Marion Williams.

"There is no perfect plan," Mr. Cheek said. "We've kicked it around for over two years ..."

After much discussion, commissioners once again failed to make any progress. Motions to keep the current system and to implement the new proposal both failed.

Mr. Johnson said it was unlikely that his department would bring the issue back to the commission any time soon.

"It cost me the same to pick up garbage, no matter who you are or where you live," Mr. Johnson said. "Ultimately, there would have to be policy that is uniform city-wide."

How this happened

The problem had its genesis more than a decade ago in the consolidation of Augusta and Richmond County.

When the two governments planned their merger, officials had to devise a plan that would take into account the differing services and financial obligations of each entity.

In general, Augusta city residents had more services, such as street lights, trash pickup and better fire protection.

There were also debts, such as the 1945 pension plan and outstanding general obligation bonds that would need to be repaid.

To pay for all of that, Augusta property owners had a separate tax rate in addition to their county taxes.

The urban services tax district was created, which basically followed the lines of the Augusta city limits.

Property owners within that area would be required to pay an additional tax rate on top of the county rate paid by all property owners in consolidated Augusta-Richmond County.

But over the years the difference between the services received by residents of the two districts has become less significant, and some debts, such as the old revenue bonds, have been paid off for years.

Today, many suburban residents, especially those in west Augusta, don't see any real difference in their city services than those of urban residents.

Trash service, street lights, and police and fire protection are basically the same in the suburbs and the city.

For example, Augusta-Richmond County Fire Chief Howard Willis said since the department has realigned fire stations in the past few years, fire protection for most of the county has improved.

Except for rural areas in the distant southern portions of the county, such as McBean, Chief Willis said fire protection is basically uniform.

Although insurance ratings vary widely between the old city and county, Chief Willis said those ratings are based on 20-year-old information. He expects Augusta to receive a single countywide rating next year when inspectors return to audit the service.

More service in the suburbs, however, hasn't meant equality for suburban residents.

Ironically, when Augusta officials decided to extend trash service into the suburbs, the way they decided to pay for it created real inequities for Augusta's property owners.

Tax and fees

In 2001, the Augusta Commission voted to give trash service to suburban residents. City residents were already paying for the service through the Urban Services tax rate.

But instead of increasing the tax rate in the county, officials chose to add a $195 flat fee to the property tax bills of suburban dwellers. Why?

The reason is the tax cap, city officials say.

In 1979, a law was passed limiting the millage officials could charge in Richmond County, based on a complex formula. The cap changes every year and is calculated with an equation based on the 1979 millage and changes in the tax digest. This gives officials the maximum tax rate they can charge by law.

So, increasing the taxes for suburban residents could create problems in keeping the tax rate under the cap.

A flat fee, however, doesn't have that problem, and when the cost of service increases, the rate can be increased without worrying about the tax cap. Or so city officials thought.

But after the suburban trash fee was set at $195, officials were reluctant to raise it, even though the cost for trash service was increasing. That went on for years until 2005, when the fund was more than $4 million in the hole, according to Mr. Johnson.

After much discussion, commissioners agreed to raise rates by $81 - to $276 for suburban residents.

But instead of charging urban dwellers the same $276 fee, as was suggested, commissioners opted to continue funding the trash service through the Urban Services tax rate, and to tack on an $81 fee.

The effect was that for the first time, many urban property owners would at least pay something for their trash service. Despite the change, the vast majority of urban property owners still pay less than their suburban counterparts.

The Chronicle's analysis of tax bills determined that an urban homeowner would have to own a property with a fair market value of at least $308,000 in order to pay the same $276 trash fee that every suburban trash customer pays.

Adding the $81 fee to tax bills of urban customers also presented challenges. The biggest problem, which continues today, is billing people accurately.

Officials had difficulty matching the customer list from garbage contractors to the property tax system, which uses parcel numbers to identify each property.

"What we did is if (the property) was coded residential, we turned it on," Mr. Johnson said, meaning that the property owner was billed for trash service.

The problem with that strategy is that many residential properties are vacant and some belong to nonprofit organizations, which are tax exempt or don't get the service.

The result is that in the past two years, the tax commissioner's office has issued more than 2,000 refunds for improperly billed trash fees.

For example, one of those billed improperly for service is the Ramada Plaza Hotel on Broad Street. The hotel pays about $2,300 in taxes per year to subsidize residential trash pickup - including the $81 fee - and it doesn't even get the service.

"That's kinda crazy," Ramada owner Bonnie Ruben said after learning about her trash bill. "I think it is definitely an inequity and very unfair."

Fair or not, because it is funded in part by urban taxes, most downtown businesses subsidize the trash service while businesses in the suburbs do not.

Another repercussion from increasing fees is that it affects the escrow accounts and house payments of individual homeowners, according to Chief Deputy Tax Commissioner North Williamson.

Mr. Williamson recently told commissioners that some banks have balked at paying the increased fees because they didn't consider them a tax. He said any future increases in trash fees would create similar troubles.

Mr. Williamson said his office would prefer to have the charge off the tax bills.

Commissioner Jerry Brigham said whatever the solution, one must be found and soon.

Even though his constituents prefer leaving the trash fee on tax bills, the current situation leaves Augusta vulnerable to litigation from an angry taxpayer, he said.

"It's just a matter of time before somebody sues us," Mr. Brigham said.

The solution

Augusta's Solid Waste Director has asked the commissioners to approve the purchase of a software package that would include a customer billing system for trash service.

So far, the votes have not emerged to approve that, nor the switch from the current tax and fee system to a separate trash bill.

Commissioner Marion Williams is still opposed to the separate trash bill.

"I don't see how having a separate billing system is any better than what we've got," he said.

Mr. Williams says he's concerned that Augusta will lose its leverage in collecting payments if the charges come off of property tax bills.

Currently, if a property owner doesn't pay his taxes - which include trash fees - the city can place a lien on the property and ultimately take it if the bill isn't paid.

Mr. Johnson concedes there might be some collection problems with a new bill, but he thinks those can be overcome. Of the solutions available, a separate trash bill is the one he would recommend.

"That's the most accurate system for me," Mr. Johnson said. "If we didn't have a tax cap I might have a different recommendation."

Some residents, such as those on Kirk Place, agree the system isn't fair.

"No question about that," Mr. Howard said, but he's not happy with Mr. Johnson's proposal, either.

He'd prefer to keep the trash bill on his taxes, so he can use it as a deduction on his federal income tax.

"If they put it out as a fee, I can't do that," Mr. Howard said.

Commissioners will have a tough time making everyone happy.

Mr. Williams says a separate bill might ensure that those who receive service pay the same amount, but he says that's still not fair.

What would be fair is a system in which every property owner paid a share - including those who don't get city trash service, Mr. Williams said.

Owners of businesses, empty buildings and vacant lots benefit from trash service, he said. A flat fee on every property tax bill would pay for curb-side trash pickup, and also for cleaning up illegal dumping in vacant lots and abandoned buildings.

It would include the overall cleanliness of Augusta, he said.

"It's got to be on every property tax (bill)," Mr. Williams said. "It think it's got to be a fair system all the way across."

Staff writer Sylvia Cooper contributed to this article.

STAFF RESEARCH: HOW IT WORKS

Augusta might be one consolidated city, but it has two systems for funding its services.

It depends on where you live - or really where you own property.

There are four tax districts in Richmond County. Two are for the cities of Hephzibah and Blythe. The two remaining tax districts are for Augusta residents.

The first Augusta tax district is the urban services district - basically the area covered by the former Augusta city limits. The second is the suburban district - basically the area outside the old city limits, what was known before consolidation as Richmond County.

Each district has a different set of millage rates and fees which determine the total tax bill for an individual property.

All property owners pay:

STATE TAX: Small portion of property tax which goes to the state

SCHOOL TAX: Supports the county school system

COUNTY TAX: Supports the city's general fund

CAPITAL OUTLAY TAX: Used to purchase equipment and other nonreoccurring expenses

Urban district property owners also pay:

URBAN TAX: Funds law enforcement, fire protection, street lights, trash service and other things in the old city area

CITY TRASH FEE: Flat $81 fee that pays for a portion of city trash service

Suburban district property owners also pay:

FIRE PROTECTION TAX: Funds suburban fire service

CITY TRASH FEE: A flat $276 to property owners with city trash service

STREET LIGHTS FEE: Fee based on $45 per 100 feet of street frontage

The effect of the tax system is that properties with the same value in different districts have much different tax bills. The reason is the property tax bill mixes tax rates, which are dependant on the value of the property, with fees, which are not. The biggest problems are associated with the way the city funds trash service.

PROBLEMS

IT'S INEQUITABLE. People pay different rates for the same service, depending on where they live and how much their house is worth. More than 90 percent of urban property owners pay less than their suburban counterparts.

IT'S UNFAIR. All property owners in the urban district subsidize trash service (whether they have the service or not). In the suburban area, only users pay, and they pay proportionally based on the number of cans.

IT'S ERROR PRONE. The tax commissioner's office issued more than 2,000 refunds in the past two years to property owners mistakenly billed for trash service.

IT'S UNDERFUNDED. The service fund was $4 million in the red by 2005, primarily because of years without a rate increase.

CASH FLOW IS SLOW. Because trash service is funded through property taxes paid at the end of the year, most of the year the service operates through loans from the city's General Fund.

ESCROW PROBLEMS. When officials added new trash fees to tax bills it created havoc with escrow accounts and caused increases to monthly house payments. Some banks balked at paying the fees at all. Any future fee increases could have similar effects.

SOLUTIONS

NEW BILL. Solid Waste Director Mark Johnson wants to disentangle the trash fee from property tax bills and bill each user separately, much like water service.

ADVANTAGES: It's fair. Everyone who receives the service would pay for it and those who don't get it would not. That is not the case now. Mr. Johnson said it would be easier to respond to the needs of individual customers if they were in a separate computer system. Cash flow would improve because users would be billed monthly or quarterly.

DISADVANTAGES: Some expect collection rates for the service would go down. Also, removing it from property tax bills would mean property owners could no longer use the charge as a deduction on state and federal income taxes. Users who currently pay little in property tax would be hit with sticker shock.

WATER BILL. Some have suggested adding the trash fees to monthly water bills of utilities customers and removing it from tax bills.

ADVANTAGES: The utilities department already has billing software and a good collection rate, so the government could expect cash flow to improve. Users would be billed monthly.

DISADVANTAGES: Many people who have trash service don't have city water, so adding them to the billing system and collecting from those customers could be a problem. Also, the Utilities Department has millions in outstanding revenue bonds, the rates of which might be affected by adding more customers and more collections problems. Also, the payment burden would be transferred from property owners to residents who are less likely to pay.

TRASH TAX. Officials could keep the service on the tax bills but do away with the flat fee. Instead, it would be funded through a countywide mill rate.

ADVANTAGES: It would ensure there was enough funding to pay for the service and get its books back into the black. The tax would be simple to collect and would be deductible on individual income tax returns.

DISADVANTAGES: Every property owner would pay whether they have trash service or not. Cash flow delays would still be a problem. Tax rates would have to increase with costs, but officials have been reluctant to increase rates in the past. Also, because Augusta has a property tax cap, increasing rates in the future could present a problem if the tax digest doesn't grow proportionally.

FLAT FEE. A $276 flat fee would be on the property tax bill of every property owner with trash service. Also, the urban services millage rate might be reduced to offset the increase.

ADVANTAGES: Everyone with the service would pay the same rate. The fee should still be deductible on income tax returns.

DISADVANTAGES: Fee increases would affect house payments of homeowners and could cause escrow account problems. Also, officials would have to work the kinks out of the system to reduce the number of refunds for inaccurate billing. Cash flow delays would remain a problem for solid waste.