Council voted Wednesday night to keep trash collection in-house. What Council did not do is address the looming six-figure deficit that faces the trash fund.
Read on.
According to the Borough’s approved budget, the total annual costs of trash services are $1,438,562. This figure is made up of direct costs of $1,191,548 and allocated overhead of $247,014. According to the spreadsheet presented by the Finance Director on Wednesday night, the direct costs are actually up a bit, to $1,223,842, bringing the total to $1,470,856. The budget also includes about $129,600 in miscellaneous revenue (sale of scrap, grants, and so on), so that the net total cost drops to $1,308,962 or $1,341,256.
In any event, the net cost per customer is either $253.58 or $259.83 per year.
Now, the problem is that the Borough has been billing the service at the rate of $221 per year ($55.25 per quarter). What do you think happens when you price something at $221 when it costs you $254–260? You lose money.
The short answer is that if the Borough keeps charging $55.25 per quarter, the trash fund will run a deficit of $168K–$200K this year. Since there is only half a year left to correct the underpricing, the needed trash fee increase will, of course, be much larger than it would have been had it been priced correctly at the beginning of the year.
The quarterly fee will need to go to $71.54–$74.67 (increase of 29–35%) for the balance of the year to plug the gap.
By the way, if you think that contracting with Mascaro would have solved this problem, think again. Mascaro quoted $269 or so per customer. This did not include any additional direct costs (such as billing and collection expenses) that the Borough would incur. More importantly, it did not include the $247K in overhead that was allocated to trash collection. That overhead allocation amounts to $47.85 per customer. The underlying overhead expense, which is allocated to all Borough departments, is not eliminated by outsourcing. The $247K would have remained a Borough cost, whether or not it was recovered through the trash fee.
The real problem is that the Borough Manager concealed the problem in the original 2007 budget, counting on the mid-year introduction of PAYT as the ‘stealth’ means to saddle trash customers with a higher fee.
The question now is what will the Council do about the trash fee.
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9 comments:
Rather than criticize everything council does, why not run again? Take Hytha's place and get back on council.
The answer to that question is that council will be forced to raise fees. There is no way around it. What was lost by not going with a fixed contract for waste hauling was the ability to fix a number of costs, then have the time freed up to work on bringing down other costs of related to this operation and other municipal services. All fees and costs need to be published on a monthly basis - including truck mileage, hours in overtime and sick time, number of gallons of fuel and the cost. These figures are just to vague with too much room to hide. How could it possibly be that 2 employee units were not charged to the appropriate operation. The director of public works should be forced out.
breuer for borough manager!
dicky brew is proposing "something D-O-O economics. Voodoo economics, people. Let Anthony and Steve Neese wish away the bad deficit-producing items. Don't let your voodoo screw up the magic that takes place on a weekly basis in borough hall.
I have A J Blosenski as a trash hauler and the rates are $74/quarter which are the cheapest around. The provide excellent service, BTW, for roughly $6 per week
Stop crying, Phoenixville. Look outside of your small little enclave. Anything that costs less than $74/quarter is a gift.
In response to the anonymous comment of June 1 at 8:26 AM:
I'm not sure I get your point. The point that I was trying to make is that in order to eradicate the trash department deficit, the fee will need to go to $71.54--$74.67 per quarter. I've done my calculations based on the approved Borough budget and on Mr. Nease's May 23rd spread sheet.
Meanwhile, Council is considering an increase to $63.25 per quarter. I estimate that this would still leave a deficit in the $87K-$118K range.
$71 to $74 is still cheap in comparison to other trash collectors. suck it up, phoenixville. everyone else pays this amount
realize that collecting trash in a very compact borough like phoenixville is far more economical than doing it it in schuylkill twp and east pikeland...obviously mascaro wanted the phoenixville contract and if not for the insaneness of borough council he would have gotten the contract, once again the public of phoenixville got screwed
dicky brew, i was just quoting "Ferris Bueller's Day Off"- anytime repubs talk economics, it's usually voodoo!
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