Portage Mayor Austin Bonta introduced a plan to restructure trash collection fees in response to Senate Bill 1.
He presented an outline of the plan to the City Council and the public at Tuesday's council meeting before formally unveiling it later this year.
Under the current system, a family is provided with two trucks and charges $20.25 per month for weekly pickup. Bonta wants to reduce that to one toter for $18 or two for $30, while maintaining the $3 monthly discount for seniors and people with disabilities.
People who need more toters will pay a higher fee – $54 for three or $72 for four.
New homes will have to pay a $100 start-up fee to secure the $80 total, but the dumpsters remain after the homes are sold, so people moving into existing homes won't be charged a start-up fee.
Portage no longer offers recycling because too few people follow the rules, polluting the recycling stream, so there is no separate recycling bin for it.
“The $20.25 trash collection fee charged to each of Portage's 14,000 households each year generates enough funds to keep the sanitation department running, from paying our sanitation workers' salaries, their payroll taxes, health insurance and other benefits, as well as the cost of things like fuel and equipment needed to run the department on a daily basis. sanitation. However, this is not enough to also cover the cost of paying a company to remove our 17,000 tons of trash each year and then take it to a landfill,” Bonta said.
SEA 1 comes into play in that Portage uses part of its share of the Porter County Economic Development income tax to subsidize waste removal. For more than a decade, $1 million to $1.2 million of that revenue went to pay for landfill fees not covered by trash collection fees. This year, $1.125 million was budgeted for landfill fees.
SEA 1 reduces property taxes and lowers local income taxes, forcing municipalities to look for ways to provide services. The new state law prohibits counties from automatically apportioning income tax revenues, but allows cities and towns to set income tax rates of up to 1.2%. But that's still less revenue than Portage generates from its share of the county's income taxes, Bonta said.
Thanks to competitive bidding for the first time in 10 years, this year's disposal fee dropped from $66 to $60 per ton, he said. Next year the price will increase by several dollars per ton.
This is just one of the ways the city has cut costs to bring the sanitation department closer to self-sufficiency. The city saved $100,000 a year by ending free access to the department's dumpsters, and another $50,000 by staggering monthly wholesale days instead of having them all occur during the same long wholesale week. On high trash days, excess trash that does not fit into the city's two trash bins is still collected free of charge as long as it is within 40 square feet of curbside when picked up by the department.
In the complex world of municipal finances, a city cannot tap into any source of revenue it wants to pay for garbage collection. For example, property taxes cannot be used for this purpose. Utilities such as the sewer department are supposed to be funded by money collected from taxpayers.
Using income tax revenue is a loophole that is disappearing thanks to a new state law.
“Starting in 2028, counties will still be able to have a local income tax that is levied on all residents of their county, but it will no longer be divided between the county government and the government of each city in each county based on what percentage of the county's population lives in each city or town, as it is now. Instead, each county will be required to levy a countywide income tax at a rate ranging from 0% to 1.2%, which is not distributed between cities,” Bonta explained.
“Under the new system created by this new law, cities will also be required to implement a new city or town income tax at a rate set between 0% and 1.2%. However, for many cities and towns, the amount of funding they will lose in property tax revenue under SEA1 by 2028 is so large that even adopting a 1.2% top rate would still result in less overall funding than they had before.”
“When my team and I first looked at this, I was very upset,” Bonta said. “Prior to SEA1, we worked to address increased operating costs in our sanitation department while prioritizing not increasing the monthly trash bills that Portage households pay.”
Bonta and his team spent months exploring options to address the sanitation gap, he said. Most of the advice they were given was simply to increase their garbage bills. But he instead favors an option to restructure rates to reflect the number of trash containers people use, as close as possible to allowing the city to charge residents based on the amount of trash they create.
Many residents only use one trash can a week but are charged for two, he said. The proposed rate structure would help them while shifting the burden to people who produce more waste.
Bonta has not yet formally proposed the new rate structure. When it does, the City Council will have to approve or reject the ordinance.
An alternative option is to use part of the additional $1.5 million the city has allocated for paving to cover landfill fees, if necessary. Otherwise, the money will be used to build more roads, Bonta said.
However, under state law, the council will be required to vote in 2027, and annually thereafter, on whether to impose a local income tax and, if so, what rate to set.
Doug Ross is a freelance reporter for the Post-Tribune.
