SCRANTON — Mayor Wayne Evans proposed a 2020 city budget that would drop the annual $300 trash fee to $250 and collect it through property tax bills.
The $116 million budget, released Friday, contemplates a major change in the way the city charges and collects the fee.
Evans described the new trash-fee billing and collection method as a “seismic shift.”
“This is big. It puts it (the trash fee) back into the tax where it belongs,” Evans said. “For the average homeowner, it’s a win. It will go from $300 to $250.”
This new garbage bill would be the same across the board in all property tax bills, and broken out separately from regular property taxes.
That way, the garbage fee would remain the same for all payers, and not fluctuate based on assessed valuation of property, as do the regular property tax bills, city Business Administrator David Bulzoni said.
“We’re looking at it as a fee in the property tax bill,” Bulzoni said. “It’s part of a very significant shift.”
The regular property tax and its underlying millages would remain the same in 2020, he said.
Property tax millages in 2020 will remain 232.521 on land and 50.564 on improvements, both unchanged since 2016.
Other taxes that also would remain the same in 2020 include the 2.4% city wage tax (the school district also charges a 1% wage tax), the realty transfer tax and local services tax.
A lower trash fee is achievable because billing it in the property tax bill means it would be spread out among a larger base of payers, Evans and Bulzoni said.
The garbage fee revenue expected in 2020 will remain budgeted at $5.6 million, the same as 2019. The city’s 22,362 parcels with buildings will get a $250 trash fee on a property tax bill. The new fee was derived from dividing the trash fee revenue by the number of parcels that will be billed.
Under this new trash-fee method, delinquent trash fee collections going forward also would become part of the collections of delinquent property taxes.
“The refuse billing situation doesn’t work. Our goal is to get away from that,” Evans said. “We just have not had much success, or real success, in collecting it,” and never knew the entire pool of who should have paid trash bills.
Property tax bills also have a higher rate of collection, 90%, as compared to the collection rate of prior garbage bills, about 65%, Evans said.
The new garbage fee would have to be authorized under separate legislation that the administration expects to present to city council for enactment before the end of the year.
Meanwhile, the budget proposal and its underlying ordinance will go before city council Monday during its meeting at 6 p.m. at City Hall.
The introduction is the first of three votes council will take on the budget, and will be followed in coming weeks by votes on advancement and adoption.
Council also will hold a caucus on the proposed budget Dec. 4 at 5 p.m. at City Hall, Bulzoni said.
The proposed 2020 budget also includes another major tax change: replacing business privilege/mercantile taxes with a new payroll tax. This move has been in the works for some time, as a piece of the city’s Act 47 recovery plan.
However, because of the timing of collections of these two categories of taxes, the 2020 budget only accounts for collecting one quarter of a new payroll tax. That’s because business privilege/mercantile taxes levied in 2019 won’t be collected until April 15. A payroll tax would be collected quarterly.
Under law, when replacing business privilege/mercantile taxes with a payroll tax, they cannot overlap. So, the 2020 budget anticipates starting the payroll tax collections in the third quarter of 2020; and collections of this third quarter won’t roll in until the fourth quarter of 2020, Bulzoni said.
The city also first needs approval from Lackawanna County Court to swap the business privilege/mercantile taxes with a payroll tax. The switch to a payroll tax is sanctioned by the city’s Act 47 coordinator, the Pennsylvania Economy League, as a step toward the city gaining a successful exit from nearly 28 years of Act 47 oversight. A court rejection of a city petition for a payroll tax seems unlikely, and the city anticipates filing the court petition soon to schedule a hearing in early 2020.
The Scranton School District also is mulling the move to a payroll tax. Voters in the Nov. 5 general election overwhelmingly approved the district making the switch, and it does not need county court approval.
The city budget changes regarding trash fee and business privilege/mercantile taxes have made the 2020 budget the most complicated budget that Bulzoni has prepared since he became business administrator in 2014.
“There are a lot of moving parts” to the 2020 budget, he said.
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