FTPA's Article 9

The FTPA brought back the trash collection fee article (first proposed by us at last fall's Special Town Meeting as Article 12) for consideration by the 2004 annual Town Meeting. In October 2003 Town Meeting voted to refer the article back to sponsor. This time Town Meeting overwhelmingly approved the article (with approximately 90% voting in favor). The motion that was approved and the background material that was included in the warrant book for the 2004 annual Town Meeting appears below. This material describes the rationale for the article and also responds to the numerous(mostly erroneous) objections that were raised last fall.

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I move to amend Article IX of the Town Bylaws, "Town Fees", by adding a new Section 8. Trash Collection Fees as follows:

8.1 Definitions. For purposes of this section the term "trash collection fees" refers to a "pay per throw", "recycling incentive" or any other fee or charge established for the regularly scheduled, curbside collection of household trash. Excluded are any trash collection fees in place on April 27, 2004 or any increases in such fees. Also excluded are any fees that may be established after April 27, 2004 for collection of materials that Massachusetts Department of Environmental Protection regulations restrict or prohibit from disposal in the solid waste stream.

8.2 Tax Levy Computation. In any year, the total tax levy plus all budgeted revenues from trash collection fees shall not exceed the amount the total tax levy would have equaled if a trash collection fee had not been implemented.

8.3 Allocation of Tax Levy Reduction. To the extent permitted by law, any reduction in the tax levy that results from this bylaw shall be allocated entirely to the Residential class of property taxpayers.

Steven A. Kruger, et al.

Framingham Taxpayers Association

Rationale

This article is very similar to the article that we proposed at the Special Town Meeting held in the fall of 2003 that was referred back to sponsor. The only difference is that we have added a new section 8.3 to address a concern that was raised in the discussion last fall. In 1980 the voters of Massachusetts approved an initiative petition, called Proposition 2 1/2, which imposes certain limits on the amount by which a city or town may raise property taxes. The objective of Article 9 is to insure that any new fees from the collection of trash do not create the equivalent of a Proposition 2 1/2 override.

Our town's government has considered the imposition of a new trash collection fee. The Board of Selectmen has the authority to establish such a fee without any further approvals. If the Board of Selectmen instituted such a fee for trash collection, and Article 9 were not passed, the amount of the trash fee revenue could simply be added to the existing property taxes. The amount of the trash fee revenue could be as high as the cost to provide the service, or more than $3 million. In our view, this would create the equivalent of a Proposition 2 1/2 override - but without the approval of the voters.

What is key is the fact that trash collection is a service that is provided pervasively throughout the town and for decades has been paid for out of property taxes. Furthermore, in both of the last two overrides (in the early 1990's and in 2002), a significant part of the rationale for the overrides was that the money was needed to continue to provide trash collection service - thus reaffirming the proposition that revenues for trash collection should remain under the umbrella of Proposition 2 1/2. Under these circumstances we believe that for the Board of Selectmen to raise new money through a trash collection fee would conflict with precedent and violate the spirit and intent of Proposition 2 1/2. Voter approval should continue to be required if new revenues are to be raised to pay for trash collection. Approval of Article 9 would assure that this happens.

Further Background

One of the objections to this article that was raised last fall was that any tax levy reduction resulting from the proposed bylaw would be split between the residential taxpayers and the business taxpayers. This was thought to be undesirable because the residential taxpayers would be paying the entire amount of any trash collection fee but would only receive a portion of the tax levy reduction. We have addressed this objection with the addition of section 8.3. The way that the tax levy reduction could be allocated to the residential class of taxpayers is through an adjustment to the tax rate split. As long as the town is sufficiently below the maximum tax rate split, the objective of section 8.3 could be achieved.

Also last fall, during the town meeting discussion of this article, one speaker in particular (Mr. Kahn) raised numerous objections to this article and subsequently released a copy of his comments for distribution. We have great respect for Mr. Kahn and so we have responded to each objection he raised. Our detailed response follows the Frequently Asked Questions section below. In summary, of all the many objections raised by Mr. Kahn, we believe that all but two are without merit. We have addressed one of his valid objections with the addition of section 8.3. The other valid objection that he raised is, in essence, an objection to Proposition 2 1/2 itself. We say this is a valid objection because we accept that people are free to have this opinion - we just disagree. And in the end that is the crux of the matter with regard to this article. If you believe that it should remain the voters' prerogative to raise new revenue for trash collection beyond the Proposition 2 1/2 limits then you should vote for this article, otherwise you should vote against it.

Frequently Asked Questions.

Q. If the trash fee cannot be used as a source of new revenues to the town, what's the point of creating such a fee?

A. There may be cost reduction benefits associated with a trash fee. Some people believe that the imposition of such a fee would encourage a greater amount of recycling, which in turn might reduce the town's costs for trash collection. Article 9 would not prevent such potential benefits from being realized.

Q. What if a trash fee is implemented and actual fees collected are greater than, or less than, what was budgeted?

A. The town will have the same range of options available that exist today for dealing with surpluses or shortfalls in existing sources of revenue. It would be prudent, especially in the first year of a new fee, to budget conservatively.

Q. Why do we need to pass this article now? Why shouldn't we wait until a decision is made on whether a trash fee should be established and what form the trash fee would take?

A. Passing this article now will clarify a key aspect of any trash fee and thus aid in future budgeting. Without this article's passage ahead of time, it would be possible for the Selectmen to approve a new trash fee as an add-on to the tax levy, incorporate the associated revenues into a future budget and build the future expenditure budget around this higher level of revenues. To then try to pass this article would be very complex in terms of trying to determine which budgeted expenditures should be reduced and by how much.

Sponsor: Steven A. Kruger, et al.
Framingham Taxpayers Association
February 21, 2004

Response to Comments Made by Mr. Kahn
To the Fall 2003 Town Meeting

1. Kahn comment. "For a time I was a member of the committee that was charged with developing a plan to provide an incentive for residents to increase recycling ... Despite the decisions it reached, the Committee was stymied ... (The) result is that the Sponsors are enabled to base their arguments on what is clearly a worse case scenario as to the size of the fee, the revenue from the program, and the entire purpose of the program."

Kruger response. Mr. Kahn's comment here seems to suggest that there is only one purpose for establishing a trash collection fee - namely an incentive-based recycling program. That may have been his committee's perspective, but there is clearly another possible purpose for the fee, and that is simply to raise revenue. I fully understand the thrust of the incentive-based recycling program, and I understand that for that purpose the magnitude of the revenues from a trash collection fee program would likely be well less than $1 million. However our arguments in favor of this article are concerned with both possible objectives, not just one. In respect to the objective of raising revenue, we have used the figure of $3 million simply to give people a factual understanding of how much money might be involved. In my discussion with the Finance Committee, when I used the figure of $3 million, the Town Manager was the one who pointed out that the figure could actually be a little higher than that. In any case, as was seen in my presentation to Town Meeting (where I used no revenue amounts whatsoever), the merits of our arguments are in no way based upon the amount of revenue to be collected from a trash fee program. Mr. Kahn's comments here are simply off the mark.

 

2. Kahn comment. "They (the FTPA) are fighting a program that has never been proposed"

Kruger response. This article is not aimed at fighting an incentive-based recycling program. This comment is incorrect.

 

3. Kahn comment. "Again, I point out that the revenue figure on which the sponsors base their arguments made before other comittees depends on at least two elements which have not been decided upon: ..."

Kruger response. Our arguments are not based on any specific revenue figure, as already pointed out in my response to point #1 above. The revenue figure we used does not depend in any way upon the design of an incentive-based recycling program Mr. Kahn's comments here are incorrect.

 

4. Kahn comment. "I want to make four specific points that I hope you will consider. Point 1. There is a real difference between a tax and a fee. Condemning a fee-based program by calling it a tax ..."

Kruger comment. I have never referred to the trash fee as a tax, or even hinted at that. In fact, in doing my research I talked with one attorney who suggested that if we could portray the fee as really being a tax we would have a stronger case. I specifically rejected that approach. There is a very fundamental question to be decided here, should the Selectmen have the authority to raise new revenues, through a trash collection fee, or should the voters retain that right. Mr. Kahn appears to want to obscure that fundamental question with extraneous and/or incorrect assertions such as this.

 

5. Kahn comment. "More is involved than a dispute over a name (referring to a tax vs. a fee)."

Kruger response. This is another irrelevant, and misleading, comment. There is no dispute, although Mr. Kahn seems determined to create the appearance of one.

 

6. Kahn comment. "A tax levy that is reduced by the amount of the total fees ... would benefit residents according to the value of the real estate they own, not the amount they recycle. A family in an inexpensive house would have a smaller saving. A family in a more expensive house would have a larger saving."

Kruger response. This is one of the few correct statements Mr. Kahn has made, but it is irrelevant. He is clearly implying that there is something wrong with this method of distributing the tax levy reduction, when in fact this is simply how property taxes work. Is he trying to initiate a class war? How would Mr. Kahn propose that the reduction in tax levy be distributed to homeowners? Should we create an administrative bureaucracy to measure how much material each family recycles and return the trash fees on that basis? I don't believe that even Mr. Kahn would think such an approach makes any sense. One of his later comments suggests this (see Kahn comment # 9 below). In that comment he proposes an "Under Ride" as an alternate remedy to this article. While the underride approach has serious drawbacks as a remedy in this situation (which I discuss later), the manner in which it would distribute the tax levy reduction to homeowners is the same as would occur with this article. Mr. Kahn's own "Under Ride" suggestion clearly contradicts the implication of his statement here.

 

7. Kahn comment. "... consider the fact that we have a dual tax rate in Framingham. The split rate puts a higher tax load on industrial, business and commercial property than it does on homeowners. Bottom line, if, for example, $3,000,000 comes off the tax levy, the main benefit of that reduction goes to commercial and industrial taxpayers, not to owners of a home of any value."

Kruger response. Last fall, this statement was almost entirely correct. This is one of two objections to the article that we believed were valid. We have addressed this objection by adding section 8.3 to the proposed bylaw.

 

8. Kahn comment. "Point 2. The proposed by-law would tie the hands of future Town Meetings as they struggle with the ongoing problem of providing essential munidcipal services..."

Kruger response. Actually, this article would not tie the hands of Town Meeting per se since Town Meeting does not have the authority to establish new fees. However, this article would tie the hands of the current and future Boards of Selectmen. That is precisely the point of the article, and the thrust of Mr. Kahn's objection here is really the heart of the matter. When you strip away all of the incorrect, irrelevant or misleading comments made by Mr. Kahn, this is essentially what is left.

Keep in mind that Proposition 2 1/2 was meant to tie the hands of Boards of Selectmen. This article is aimed at preventing the erosion of Proposition 2 1/2. If you believe that Proposition 2 1/2 should be weakened, then you should vote against this article. On the other hand, if you believe that Propostion 2 1/2 still makes sense then you should vote in favor of this article.

 

9. Kahn comment. "Point 3. Prop 2 1/2 itself provides a method of doing exactly what this article will do and does it more wisely and responsibly. Prop 2 1/2 contains a provision known as an "Under Ride." ...

Kruger response. Mr. Kahn is mostly off the mark here. The effect of an underride would be similar to this article in some ways, but quite different in others. The most important difference is that this article would reduce the property tax levy only, whereas an underride would lower not only the tax levy, but also the tax levy limit. To appreciate the significance of this distinction, consider that the amount of revenue from an incentive-based recycling fee would vary from year to year. If the budgeted revenues from trash collection fees rose from one year to the next and we adopted Mr. Kahn's suggestion, we'd need another underride vote every year. What's worse, under Mr. Kahn's underride approach, if the budgeted revenues from trash collection fees declined from one year to the next we'd actually need an override to restore the property tax levy to its previous level.

As pointed out by the proponents of the incentive-based recycling fee themselves, if such a program worked, the amount of revenue from the incentive-based recycling fee should actually decline from year to year as the program succeeded in convincing more and more people to recycle a higher percentage of their refuse. Thus using the underride approach initially might very well lead to a succession of overrides just to keep total revenues where they were. This endless succession of underrides and overrides would be entirely avoided by using the approach proposed in this article.

Thus to say that an Under Ride would do exactly what this article would do and do it more wisely and responsibly is incorrect. An underride would be a horribly ineffective and costly alternative to this Article.

 

10. Kahn comment. "Point 4. Last evening, Town Meeting created a revolving fund for school bus fee revenue. In doing so you implicitly approved this school department imposed fee. There is no logical reason why one fee should be treated differently than any other, ..."

Kruger response. There is a simple, logical reason why the trash collection fee should be treated differently than a school bus fee. The school bus fee affects approximately 1800 children. Considering that some households are paying for more than one child to ride a bus to school, the number of households affected by the school bus fee is quite a bit less than 1800. Thus the school bus fee affects a small fraction (on the order of 10%) of the households that would be affected by a trash collection fee aimed at raising new revenue. In our view, the school bus fee is an example of a fee that makes sense, in that it pertains only to the very small fraction of the taxpayers who benefit from the service.

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