SAN JOSE -- San Jose officials moved toward abandoning in-house billing for residential trash collection with a vote Tuesday to explore having residents either pay with their county property taxes or directly to the garbage companies.

For residents, the switch is expected to save them money that the city otherwise would have to charge them to replace an outdated billing system. City officials estimated the annual savings to ratepayers at anywhere from $333,000 if haulers handle billing to $3 million if it's included with county property taxes, as the city does with sewer fees.

"It's a cost avoidance to the ratepayers," City Manager Debra Figone said.

City administrators plan to further research the options and survey residents and return to the City Council for a decision in the spring. The billing switch would occur in 2014 if haulers take over or 2015 if it is handled by the county tax collector.

Despite the projected savings to ratepayers, there are downsides. Outsourcing trash billing would cost 30 to 33 city staffers their jobs, though city officials said they expect most would be reassigned rather than laid off. The city no longer would be able to offer 20-gallon cart service if billing is included with county taxes, though city officials said the smaller carts aren't popular and don't seem very effective at reducing waste.


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San Jose also would forgo $500,000 a year in payments for overhead, and lose about $2.1 million a year in late fees that the city currently uses for a variety of needs such as the costs of cleaning up homeless encampments.

Council members Don Rocha, Ash Kalra, Kansen Chu and Xavier Campos were opposed in the 7-4 vote.

Rocha said the city should have solicited bids for replacement billing systems and cited concerns about the loss of overhead and late-payment money to the city.

"I am concerned that by taking an in-house option off of the table without additional information about alternative systems, we are setting ourselves up to make a decision that could also have serious policy implications -- not the least of which being a loss of discretionary dollars and overhead revenue," Rocha said.

Ashwini Kantak, acting assistant director of environmental services, said other cities typically have trash billed directly by the hauler, or in some cases including Berkeley, Dublin and Palo Alto, include it with property taxes.

San Jose switched from hauler to in-house billing in the 1990s, but city officials feel it hasn't served the city well. The last time the city solicited billing software in 2001, the process took longer and cost more than expected, and shortly after the new billing system went online, the vendor, PeopleSoft, was acquired by Oracle and has since reduced technical support.

San Jose Chief Information Officer Vijay Sammeta said the current system doesn't allow residents to pay bills online with Apple computers. By outsourcing the billing operation, the city would avoid the cost and risk of buying complex custom trash billing software, he said.

Though the city's current software system also handles billing for water service and business taxes, Sammeta said those are less complex and the city can purchase new off-the-shelf systems that can continue handling those in-house.

Residents currently pay an average $60 trash bill every two months. If the city includes trash billing with property taxes, residents would pay the $360 annual bill along with their property taxes, half of which are typically paid in December and the remainder in April. Haulers would directly bill apartments just as they do commercial properties.

Replacing San Jose's current billing software would cost an estimated $16 million. For individual households, that would come to $14.40, a cost that would be avoided by switching to the tax bills. If haulers handle the billing, the avoided annual cost would be just $1.68 per household instead of $14.40 with the tax billing. But the city would continue to collect the $2.1 million in late fees.

Contact John Woolfolk at 408-975-9346. Follow him on Twitter at Twitter.com/johnwoolfolk1.