Should the City Stop Picking Up the Garbage?

I’ll be helping provide information at a City Budget 101 workshop for city residents on Tuesday evening.  Let me tell you a quick story as to why this workshop might be worth attending.

 A few years back, the City of Santa Cruz was facing one of its many recent financial challenges. If I recall correctly, that was a year a court ruling had recently deprived the city of a significant source of tax revenue for its General Fund.  The City leaders were trying to help communicate the difficult situation to the broader community. A well-known local business owner suggested to these leaders that all the city needed to do was to stop picking up the garbage for a few weeks and everyone would know how bad the situation was.

While this business owner’s penchant for marketing and communications was clearly at a fairly high level, it also demonstrated his lack of understanding of how our city budget works. The mechanisms and laws that guide our city budget are complex and are not always apparent to the casual observer.  If the business owner had been given the opportunity to attend a City Budget 101 workshop, he probably wouldn’t have made his garbage pickup suggestion.

Here’s what he might have learned.  The city budget is divided into a variety of funds.  The largest is the General Fund.  This is the one that contains all of the taxes the city collects.  And this is the fund that pays for a variety of community services, including police services, fire protection and parks and recreation programs.

But there are other large city government funds (like separate bank accounts) that have more specific purposes. The use of the dollars in these funds is strictly regulated and constrained by state law.  For instance, the city has a Refuse Fund.  The city’s Refuse Fund operates the city “enterprise” of collecting and processing garbage, recyclables and other waste materials.  It is completely self-sustaining.  City residents pay refuse charges as part of their City Utility bill at a level sufficient to sustain that refuse collections and processing system.  Because it is an enterprise fund and is operated only with the payments for the service provided, state law wisely says that the dollars in that fund can only be used for refuse activities. 

These enterprise funds tend to stay in better shape during a time of budget challenges because the rates paid by customers of these funds are periodically adjusted to cover their actual operating costs. On the other hand, activities such as public safety services, which are paid for with tax dollars in the General Fund, get into more trouble because the city cannot unilaterally increase taxes to covered increased costs. Taxes (as opposed to fees and utility rates) can only be raised by voters.  As you know, this is no simple matter.

 Now, circling back to the business owner’s suggestion, we can see why the garbage pickup idea isn’t really practical or appropriate.  When our General Fund has a crunch—when tax revenue is not matching the cost of government services paid for from the General Fund—we can’t look to the Refuse Fund for help. 

And we can’t say to the community that we will not pick up the garbage when, in fact, the Refuse Fund has enough money to continue picking up the garbage.  All we can do is reduce services that are paid for by the General Fund or ask voters to agree to pay more taxes.  This is why, in recent years, there has been pressure on the Police Department budget, on the Fire Department budget and especially on the Parks and Recreation department budget.  These kinds of general services are the only ones the City Council can cut when the General Fund is short on revenue.

The City Council faces many difficult budget decisions in the months and years ahead.  We need the help and input of the above-mentioned business owner and everyone else in the community to get through this. 

But we also believe the input will be better if it is based on what is legally possible rather than on ideas that sound good but are impermissible.  Thus, we created the Budget 101 Workshop.  We hope we can make the complicated creature known as the city budget a little easier to understand and work with.

Please join me, the City Manager, the City Finance director and your neighbors at the Budget 101 workshop and become a well-informed contributor to the process of meeting our city’s financial and service challenges.

 City Budget 101 Workshop

Tuesday May 31, 7:30 pm to 9:00 pm

Police Department Community Room

155 Center Street