Springfield Mayor Charles Ryan: Clearly [Judge Sweeney’s] is a very serious decision (PDF), and one that bothers us deeply. The trash fee was not anything that was done on a whim; it was done with significant forethought. As a matter of fact, it was recommended by the Department of Revenue in April 2003 as one of the significant ways out of the collapse that the city government of Springfield had. We held off as long as we could, but it became clear that there was no way that we could be successful in the long run unless we charge a fee to defray a significant part of the cost of our trash collection.
We spend about $9 million a year on trash collection. And if this [fee] is fully implemented, it would bring us about half of that amount on an annual basis. The general fund would continue to pay the rest of that cost. The procedure not only follows the example of 80 other communities that have this same system, but is the recommendation from the Department of Environmental Management of the Commonwealth of Massachusetts as to how to handle this.
We’ve gone forward steadily and objectively, and I think intelligently, and we were very much surprised to hear that in the judge’s opinion, we failed the second and third test. We’re looking forward, as [Sweeney] indicated in her decision, to an early trial date so that this matter can be tried on the merits.
This has huge implications for the city of Springfield. We’re concerned that if Judge Sweeney’s preliminary decision becomes the final ruling on this matter, we’re looking at an enormous budget crisis. If we were to try and adjust this year’s budget right now, when we’re almost halfway through the year, it is almost the same as trying to deal with a $5 million gap. When that translates into jobs, it is a tremendous number of men and women who are working in good faith, and are doing a solid job for the city of Springfield.
It also conceivably could have a very detrimental impact on a $38 million bond issue that we have already advertised in the paper, and the decisions have been made as to what we’re going to put in that bond issue. It is a tangible signal of the city, finally recovering itself and moving forward. Even that is in jeopardy right now. We will continue to do the best we can, and we will watch this as it unfolds, but we have to stand ready to make the very difficult decisions which might be necessary in massive job layoffs, and perhaps in the cutting back or elimination of the bond issue, if that becomes necessary.
This is a very serious, and a very difficult time for us, here in the leadership of the city of Springfield. One of the main things we’re trying to do in that bond issue is to put up the money so we can move forward with Putnam High School. That’s going to be about a $120 million project. We have to put up ten percent, or $12 million. That $12 million is in the bond issue. The school is threatened with a loss of accreditation as it is. I can’t think of anything more important than giving these young people an education in the trades, and in that line of endeavor, so that they can go out into this community and get decent jobs. So when you’re talking about something as fundamental as whether or not we’re going to have a vocational high school, you can begin to get some idea of how seriously we view this.
Finance Control Board Executive Director Philip Puccia: As we’ve stated, I think in Mary Tzambazakis’ affidavit, the city went through a process that many other cities and towns in this state have gone through: the implementation of a trash fee. And the procedure that we used, we believe, is quite similar if not a replica of what was done in many other cities and towns.
We do take a little comfort out of a particular part of the decision which says we have the right to implement the trash fee. [Judge Sweeney], I guess, took exception with the methodology we used to implement it. We believe we were correct, and we believe we were following legitimate examples given to us by other communities in the Commonwealth.
The mayor is correct; it is a serious issue for us to deal with. The money required to make these adjustments would fall solely on the city side of the budget, which is approximately $130 million, and we’d need to find about $5 million worth of savings in that budget between December 15 and June 30—which is not an easy task, when most of your expenses represent salaries and benefits, about 75 percent or so, you take away electricity, and fuel for police cruisers, and things like that, and you’re left with very little room to make that sort of adjustment on this sort of notice.
In addition, the mayor is correct when we talk about the capital plan. The city’s finances, while we’ve made tremendous progress, are precarious. Our recovery is nascent, and it’s weak. A $2 million hit this year has an impact on the plans for rebirth and regrowth. You know, we’ve had a lot of challenges, the mayor and I, in the past couple of years that we’ve been together. This is a serious one. We’ll face it, we’ll make the decisions like we did to impose the trash fee, and continue to move the city forward. But this will not be easy, or without pain.
Q: I thought that the amount you were expecting to lose was $2.8 million. So why is the loss $5 million?
CR: Because of the time of year. We’re almost to the halfway point of the year, a couple weeks away. If we have to save or reduce our budget by $2.8 million within six months, it’s the same as though you were told to do $5.2 million over a year’s period of time. So we’ve got to make cuts that really reflect, on an annual basis, some $5.2 million, because we’re already halfway through the year.
PP: And the fact that the ruling comes out and we are enjoined from collecting that revenue means that our budget is technically out of balance. Which means we may or may not be able to set a tax rate, according to Department of Revenue procedures. That’s an issue we have to discuss with them, and with the [Finance Control] board when we meet on Monday [November 27, at 11:00 am, in room 220 at City Hall].
CR: And if we can’t set a tax rate, we can’t send out tax bills.
PP: If you can’t send out tax bills, you can’t collect revenue. And then you can’t operate the government.
Q: Part of the judge’s order was that the city send out notices to everyone saying don’t pay the bill. Is the city going to do this?
PP: Sure.
CR: Yeah, we’re going to conform to the judge’s order.
Q: What is it going to cost you?
CFO Mary Tzambazakis: $14,000 for the mailing.
Q: Is that postage and labor, or just postage and stationery…?
PP: I think it’s the whole cost.
MT: We have to send it first-class mail.
Q: What is your whole strategy now, moving toward a trial—a trial will be held by when? What are your options?
CR: First of all, it’s important that the people know that we don’t have a lot of options here. If we lose this income, this revenue, there’s no other place that we can turn to and get substitute revenue. And so what it really means is that we have to reduce the expenses of the government and we talked already, in a general way, about what that means. We can’t raise the property tax any more than two and a half percent a year. That was done, that’s already taken care of. We can’t impose any new taxes without legislative approval. They’re not about to give legislative approval. And so, if we are thwarted in this additional revenue, we’ve got this—as Phil says—a gaping hole. Not only for ’07, but also for ’08, and beyond that.
Q: You want that trial as quickly as possible.
CR: We don’t have a plan that we’ve thought of yet, and I think we’re as close to it as anybody, and certainly with Mary and all these good folks who are part of our cabinet, we’re just doing the best we can to comprehend the m any implications, all of which are negative.
Q: Gentlemen, is there anything in the judge’s ruling that gives you optimism that you will prevail in the long run in court? How optimistic are you that the city will prevail in this legal issue?
CR: I’m not sure optimism or pessimism is important. When this plan was designed, it was our belief that it was absolutely, totally legal, and imposed a fee. We understand the difference between a fee, which is permissible, and a tax, which is impermissible. And so the best thinking of the city government went into that, and we’ll just march forward. The only good thing that I got out of the opinion is that the judge is going to hold an early trial. The longer this goes, before we get a final result, the more serious it is. So at least we’ll be able to have our day in court, where evidence will be presented, and hopefully the judge will be persuaded that what we say, in totality, warrants the approval of this trash fee. When you put the $.25 a day that this costs the persons who have to pay against the impact on this city at this fragile time in its recovery, I mean, there’s no comparison.
PP: A lot of times we hear about communities raising fees and desperately crying for money, and that there will be layoffs, and the like. I think one of the things that we have managed to do, which we’re proud of, is that there were no wage cuts, there were no layoffs in the absolute depths of the city’s crisis. But over those two years, we figured out that you could not cut your way out of the city’s predicament. You really had two options—you have to raise some revenue, and you have to improve your operations. We’re in the process of improving operations every day. But we still need to grow the economy within the city, and we have to generate, offset, some expenses, through this fee process. This is what we attempted to do, so we didn’t have to make decisions of laying off employees, who really have stuck with the city through its most difficult times. And it’s not a decision we look forward to making.
CR: The other thing I should say is that the city has yet to receive any money from the state government to tide us through this problem. Everything that’s been done has been efficiencies that affect the city government, and the city employees, and the taxpayers. An attempt was made eight to ten months ago to get some financial assistance. That was unsuccessful. And it was only when we got to that point when we realized that we had no alternative other than to impose this fee. This was the last thing we wanted to do, and we did it as a last resort. But at that time, we had no place else to go. We anticipated that we’d be successful because the guidelines are very clear, and in our judgment we had followed the guidelines.
PP: To speak to the case itself, Attorney [Ed] Pikula’s going to be representing the city. One of [Sweeney’s] statements is that, "When all of the facts are heard, the outcome might be different." We take some hope in that, that when we make our case, completely and fully, that there will be a different decision, at least that’s our hope, and that’s how we will proceed.
CR: We’ve handed out to you copies of a list of some 80 communities that have essentially—they have different price points [for trash collection], from a couple of dollars all the way up to $350.
PP: And also, Mary Tzambazakis’s affidavit. To be specific, the revenue collected is spent for a specific purpose in DPW, which is the collection of trash. Just to give you some sense—the money is collected for the purpose of giving trash service, and it is spent for picking up the trash. Just so you know. We’ll show you the account numbers if you have any doubt.
Q: How soon would you have to have a trial, if it went your way, to reap some of the benefits of this fee?
PP: One of the options that could be considered, although I don’t know the outcome, would be for the board to consider loaning additional money to the city. We’ve been trying to raise revenue and reduce expenses. The loan balance at $26 million is difficult for us to pay back in the future as it is. So borrowing additional money for something we’re going to have difficulty paying already, is really not an option we would feel comfortable recommending to the board.
CR: You can’t cut your way out of this crisis, and you can’t borrow your way out of this crisis.
Q: What do you think you would look to first as far as trying to make back the $2.8 million you would lose as a result of this decision?
CR: I think the only place of any significance is in layoffs.
Q: Wages. Can you say anything as far as what department…?
PP: I wouldn’t say that.
CR: We haven’t done that analysis yet.
Q: What about going in the opposite direction, like, privatizing trash entirely, or having residents pay fully for the services?
PP: We did a thorough audit of the cost to collect and manage trash services in the city. And we conducted an open competition with the private sector to bid on the city’s contract to collect solid waste. At the end of the day, we determined that it was less expensive, with the city’s current workforce, with its current equipment, to do that collection. So we already sort of know—we know the answer to that. So, no, I don’t think that’s an option for us right now.
Q: Do you have any comment on Judge Sweeney’s reference to the Emerson case about a fee versus a tax?
PP: Other than we think we complied, no.
Q: What about the opt-out provision? It would seem that that was one of the things that Judge Sweeney found faulty; that the executive order makes it too difficult for people who do want to opt out.
CR: I think it’s very easy.
Q: How much proof would someone have to bring—?
CR: As a matter of fact, the other cities and towns that we’ve analyzed, in virtually every case, have exactly the same kind of provision.
PP: Except they make you pay to opt out. Some of them make you pay to opt out!
CR: Some of them make you pay for the privilege of opting out. That’s not in our plan. So, we’re a little bit mystified as to why [Sweeney] thought that was coercive. She talked about us having a monopoly. This is not a money-making monopoly; this is a money-moving monopoly. In other words, even with the trash fee, we would only be defraying half the cost of trash collection and trash disposal. And I think the reason there’s not a wild dash on the part of people to come up with an alternate hauler is that—I think it’s very clear that wherever they’re going to go, they’re going to pay substantially more than they would be paying the city of Springfield with a trash fee. So all they’ve gotta do is say they don’t want us to pick it up, and they give back the barrel, and show proof that they’ve got somebody else. And this is from a public health and environmental point of view. We followed the procedure set up by the Department of Environmental Management. You don’t leave a city this size with no controls over how the rubbish is going to be picked up, or whether it’s going to be picked up. We have very serious concerns about that. It’s not too much to expect the people who are not going to have us pick it up will indeed have it picked up by somebody who is qualified to do it. I think it’s a very reasonable exercise of the city’s responsibility.
Q: Mayor, this morning, [State] Rep. [Cheryl Coakley-]Rivera mentioned the idea of appealing to Governor-elect Patrick, about getting more funds to cover this gap.
CR: That’s fine with me. I’m all for it.
PP: Happy to have her do it.
Q: Is that realistic, though, considering—?
CR: He’s the busiest man in the United States right now. I’m sure that at his convenience, at his schedule, I’ll be meeting with him shortly. Because we’ve got some profound economic problems. And I’m hoping and anticipating a much more interested response on his part than we’ve been used to in the past. But that’s just generalities. I have no way of knowing, and he’s got a whole series of pressures of his own, but I can tell you, we would not have levied this fee in the first place if the legislature had used their power of the purse to give us, let’s say, for example, $4 million. Because that’s what we would raise from this—we’d rather spend that money than come to our people. And again, I feel it’s very unfortunate that the people of Springfield as I say, for the last two and a half years, any pain in this has been shouldered 100 percent by the people of Springfield, with no assistance.
