Nov. 26, 2007 — Strolling through his vast storage yard at MSI Building Supplies in Crown Bay, co-owner Tom Brunt reflects on the environmental-user fee (EUF) proposed by the V.I. Waste Management Authority (WMA) and practically spits as he declares, "It's a license to coin money."
Brunt, who serves as the president of the St. Thomas-St John Chamber of Commerce, claims the EUF proposal lacks planning, at best, and, at worst, spells financial hardship, if not ruin, for local businesses and residents.
May Adams Cornwall, the executive director of the WMA, says — hold on. She acknowledges that more planning is necessary, but says problems will arise any time a new system is launched. The authority is busy fielding concerns and is prepared to develop solutions, she says. Besides, Cornwall says, the authority has an oversight body in the Public Services Commission (PSC), whose mandate is to regulate the WMA. Almost as an afterthought, she mentions that the legislation that created the WMA calls for an EUF.
The standoff between Brunt and Cornwall is a microcosm of the battle brewing over how to manage the territory's solid and wastewater disposal in light of the EUF put forward by the authority. Brunt says the Chamber needs several weeks to complete its own assessment of the fee system's impact on the territory, but it may be too late. The PSC intends to vote on the plan Nov. 28.
At that meeting, scheduled to take place at PSC headquarters at Barbel Plaza beginning at 5 p.m., the commission can take a variety of actions, including approving the WMA's plan in its entirety, approving parts of it or rejecting it outright, according to Michael Moore, the PSC's assistant legal counsel. The PSC could also simply table action on the plan. Moore brought out binders holding more than 1,000 pages of documentation about the proposal that have come before the commission, including transcripts from public testimony, copies of emails received and records of phone calls placed to the commission about the WMA's proposed fee system.
Working Toward Self-Sufficiency
The EUF is Waste Management's answer to weaning itself from the territory's General Fund to become self sufficient, as it is mandated to do. The WMA is proposing to achieve self-sufficiency by imposing an across-the-board tax, beginning in January, on virtually all imports into the territory — be they by plane, barge or mail. This so-called advance-disposal fee would tax items by weight, ranging from seven to 12 cents per pound, and that in turn would pay for solid-waste disposal costs. Wastewater disposal would be funded by more than doubling the current fee of $50 per residential unit to $110.97, then increasing fees by 15 percent annually over 15 years.
Business owners are outspoken in their opposition to the plan, calling it bloated and bureaucratic, and say they'll have to pass the expense along to consumers — if they can even survive its imposition. They contend that the plan will trigger a sudden cost-of-living increase on a significantly impoverished population. According to the latest statistics from the U.S. Virgin Islands Kids Count Data Book, 35 percent of children in the territory live below the poverty line, compared to 18 percent nationwide.
But the WMA says there's an urgent need to shore up the territory's disposal systems. For years the systems have been out of compliance with the federal government, whose thumb is pressing down hard — including the imposition of multi-million dollar fines. The import tax, Cornwall says, will enable the WMA to ramp up services and close budget gaps.
While there's strong disagreement on the best way to collect the needed revenue, Cornwall says the import tax — or advance-disposal fee — was included in the legislation that created the authority in 2004.
"I believe … it was actually embedded into the legislation," Cornwall said. "If you take a look at the legislation, it actually states that the fee will be placed on the goods brought into the territory. It seemed like the fair way to get everyone to pay. With respect to advance-disposal fees, they're used in the States on select items. We said we'll do it on all items."
Implementing the Fees
One of the major questions is how. Unanswered are such things as imposing a tax on mail.
"I'm not fully aware of what you're talking about," said David Stevens, officer in charge of the St. Thomas mail service, when asked about the WMA possibly taxing the mail. "We don't operate like that. No local government comes in and assesses tax on our mail."
Nevertheless, the WMA legislation claims a right to do so based on a 1932 act of Congress.
Other questions still unanswered include rebates on recyclables. No price structure has been developed, Cornwall said. She also said the WMA would eventually like to double the numbers of homes on St. Thomas receiving house-to-house trash collection to 50 percent, but no feasibility study has been conducted to determine how cost-effective that would be. Service expansion would be examined on a case-by-case or area-by-area basis, Cornwall said.
With house-to-house pickup, the WMA would look at taking away sorted recyclables, but, again, Cornwall wasn't clear on how residents would be remunerated. She speculated on a potential plan, acknowledging that it would mean weighing recyclables at each homeowner's curbside.
"We'll probably provide them — not a rebate on the spot, but if we are able to, we'd tally that over the months," she said. "… you recycle X pounds of glass bottles and cans, some portion of that can be returned to you, either by a check or a credit."
It would ultimately be better if residents brought recyclables to a drop-off site, Cornwall added.
Brunt clearly considers the plan half-baked.
"The Chamber of Commerce is not against managing our waste," Brunt said disgustedly. "It's against this bloated, bureaucratic model, which they've never really investigated."
Exceptions to the Rule
Another part of the fee system calls for providing "special exemptions" for some importers. But again, no formal plan exists to address who gets exemptions and why. Cornwall said it would be determined case by case.
"The people who scream the loudest are going to get the exemptions," Brunt said. "Then the poor taxi driver in Tutu is going to get hit because business X-Y-Z will now be exempted, and everyone else will need to cover that loss."
Cornwall agreed that exemptions lead to a transference of costs, but she said the WMA is taking all of that into account. However, she said the authority is hamstrung by a lack of staff. The Senate recently denied a request to add 64 people to her staff of 170.
"People need to put it in perspective that we're in and we have a system that needs to run on a daily basis, and we need to make big changes to it and get the needed funding," Cornwall said.
Off the bat, several businesses will likely argue for a special exemption on the grounds that what they import doesn't necessarily wind up in the landfill.
Brunt's business brings in tons of imported steel and wood for construction, a great deal of which becomes part of a permanent structure. Nevertheless, he would be paying a disposal fee on the products.
Robert Barton, owner of Caribbean Machine Metals and Design, stood in his machine shop near Fortress Storage and ranted about the proposed fees. He also imports steel.
"They're going to do it by the pound, and steel is heavy!" he said. "It's going to put me on the border of closing my doors."
In Havensight, sitting tucked way at his upstairs desk, Dockside Bookstore owner Jonathan Gjessing politely mused on the 12 cents-per-pound levy this new system would impose on his imports — books. He's being taxed at the highest rate, yet he argues that
most people save their books or pass them along.
"They don't usually wind up in a landfill," he said, although he acknowledges that their packaging does.
For Brunt however, plenty of his imports require little if any packaging.
An Alternate Plan
The fair solution, according to Brunt, Barton and Gjessing: charge for what's dumped. In other words, rather than paying an advance-disposal fee, impose a so-called tipping fee. That in turn will ensure a greater interest in recycling.
"If there were a tipping fee, I'd damn well figure out how to reduce my waste," Brunt said. "But there is no incentive — people are going to say, 'I've paid to get rid of it, so (WMA) — get rid of it.'"
Gjessing calculates that not only will the fee will drive his costs up by $10,000 a year — a cost he feels he'll have to absorb rather than pass along, given competition from Internet book vendors — he's worried some distributors may simply drop him rather than comply with new import protocol that requires items be assessed by weight.
Invoices do not state weight. So how will the tax be assessed, business owners wonder. Will they have to empty and weigh their shipments? What additional cost would that process bring? Gjessing said this alone could cost him publishers, and possibly his business.
"If Waste Management says you have to do such-and-such and we say to the publisher, 'You have to comply,' … they'll say, 'No, you're a tiny market, it's not worth it to us.'"
Brunt says he has advocated a tipping-fee solution for years, ever since the notion of advance-disposal fees first arose. But even when it did, it wasn't anywhere as costly as the fee currently proposed.
"'A penny a pound, a penny a pound' — it was repeated over and over again," Brunt recalled about the initial fees discussed. This system, however, imposes fees of between seven and 12 cents per pound. And Brunt calculates that the WMA is underestimating the revenues it will wind up collecting, because they're based on 2004 imports.
If the annual increase in container loads coming into the territory over recent years is any indication, Brunt said, imports have gone up substantially.
"There were, I believe, 34,000 TEUs (trailer equivalent units) brought in in 2005," he said. "It's expected to top out at about 57,000 in 2007. That's a staggering increase. (WMA's) projections for revenue are understated dramatically if we say a TEU is a relevant unit of measure."
"Tighten It Up As We Go Along"
That's where the PSC comes in, Cornwall said. If an adjustment in fees is needed based on rises or drops in imports, the PSC has the authority to make changes.
"Its not that we don't know what we're going to do," Cornwall said. "Yes, there are some implementation plans that need to be put in place, I agree with you. But as with any startup, we need to begin somewhere and tighten it up as we go along, and the PSC is there to make sure we operate properly as well."
The 2004 WMA legislation states that the WMA should establish fees "… taking into account the need to avoid undue hardship among consumers in the territory and other equitable considerations. The environmental-user fees … shall be subject to the regulation of the Public Services Commission …."
The ball is in the PSC's court Wednesday.
"That is the meeting that we've set aside when our six commissioners would vote yea or nay on accepting the WMA's proposal on the EUF and the wastewater user fee," Moore said. "We're purposely having this meeting at five in the afternoon to accommodate as much of the general public as possible, because we feel it's very, very important for the public to express their concern about the WMA fees and the environmental-user fees."
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