Palo Alto's garbage rates are scheduled to rise in the fall for the second year in a row, but this time every residential bill will feel the same impact.
The City Council voted 8-0, with Greg Schmid absent, on Monday night to approve a $4.62 fee for residential refuse bills, effective Oct. 1. The council adopted the new fee to help close the $3.7 million deficit in the city's refuse fund and to bring the residential and commercial rates a bit closer to parity.
The council also agreed to continue the 6 percent increase it approved to residential bills and the 9 percent increase it approved for commercial bills last September. Both rate hikes were scheduled to expire Sept 30.
The new fee was imposed by the council as an interim measure while staff is considering a more dramatic overhaul to the refuse-rate structure. Palo Alto's refuse fund has been losing money in recent years as more customers switched to smaller trash cans, trimming their garbage bills and the city's revenues. The new rate structure will likely include charges for recycling and composting, services that are currently offered for free.
The flat fee is helping city officials reach their goal of creating more parity between Palo Alto's residential and commercial customers. Preliminary analysis from the Public Works Department has indicated that commercial customers are paying far more than their share for the garbage operation, effectively subsidizing residential customers.
Brad Eggleston, manager of the city's environmental control programs, wrote in a report that staff's recommendation to raise residential rates is "based on the need to bring the residential rates up to a fuller cost recovery level while attempting to correct the existing inequities between residential and commercial sectors."
According to the department's estimate, residential rates would have to be increased by 79 percent for parity to be achieved.
The Finance Committee discussed the new residential fee on July 19 and voted unanimously to support it. In addition to bringing in needed revenues, the new fee would bring the city closer to compliance with Proposition 218, a state law that prohibits refuse rates from exceeding the cost of providing the services.
"We're addressing some inequities in the cost of service study that have come to light," Councilman Greg Scharff, who chairs the Finance Committee, said Monday. "We didn't want to exacerbate these inequities."
The council swiftly approved the new fee with no opposition from any of its members or from the public. It also approved a staff plan to borrow $1.25 million from the General Fund to avoid having to increase the rates further. The refuse fund would repay the money in 2013.
Staff will return in the fall with further proposals for reducing expenditures in the refuse fund, including an analysis of a potential closure of the city's Recycling Center in the Baylands.