Memo Alleges the County Overcharged Trash Firms

Ventura County may have been overcharging trash companies to operate in the county, according to an internal county memo obtained by The Times.

Whether there indeed have been overcharges is in dispute, but the memo, written in January by an accountant with the county’s Solid Waste Department, has triggered a total reappraisal of how the county fees are calculated, sources said.

And the problem over fees has raised other issues, including allegations by the accountant who wrote the memo that his superiors tried to squelch the information.

In a July letter to Public Works Agency Director Art Goulet, Frank Erbeznik alleged that his supervisors tried to keep his memo a secret from trash haulers.

“I don’t believe the public is being served,” Erbeznik said in the letter. “I would like to bring some accountability to bear on this issue.”

Erbeznik eventually turned over the information to the Ventura County district attorney’s office, Goulet said.

“They may or may not conduct an investigation,” Goulet said. “I just think Frank felt he wasn’t getting any satisfaction. I don’t think he had to do that, but I wouldn’t have dreamed of getting in his way if that’s what he felt he had to do.”

The companies and county officials have been meeting since June to try to come up with a new, standardized formula, Goulet said.

The internal memo that started the controversy consisted of a limited audit by Erbeznik of the quarterly receipts of one company. It covered trash hauling operations in an unincorporated part of the county.

Using information he obtained through the limited audit, Erbeznik estimated that the county overcharged Ventura County’s largest waste hauler, E.J. Harrison & Sons, as much as $117,000 between September 1994--when the fees were introduced--and March 1996.

Extrapolating from the data he generated from the limited audit, Erbeznik also estimated that the county may have overcharged GI Industries, the largest trash hauler in the east county, up to $17,000 during the same period.

Officials from E.J. Harrison & Sons would not comment on the possible overcharge except to say they are looking into the matter.

Mike Smith, chief executive officer of GI Industries, said the company has subsequently confirmed on its own that Erbeznik’s estimates are accurate and that GI Industries may have overpaid anywhere from $12,000 to $17,000.

“Think about it,” Smith said. “If we were overcharging customers or had made a mistake, there would be an uproar. We would have to pay that money back in an instant. No excuses.”

But Kay Martin, director of the county’s Solid Waste Department, said Erbeznik’s findings were based on incomplete data.

Her department’s surveys of how each of the trash companies keeps its books and calculates fees has revealed inconsistencies across the board, Martin said.

“It may be that [the companies] underpaid. It may be that they overpaid,” she said. “That’s what we have to determine, but until we do a complete audit, we really don’t know. . . . It’s clear that there are some discrepancies in how the companies have been calculating their fees.”

Erbeznik also said he found slight overcharges to three other trash haulers--Hillside Rubbish, Las Virgenes Disposal and Ojai Rubbish--that serve some unincorporated portions of the county. Dan Van Rossen of Ojai Rubbish said he believes his company overpaid the county.

Last year, the department received about $630,000 from the five trash companies, and about half that amount came from fees on rates charged by haulers to residential customers. The rest came from fees on rates for commercial service.

The fees the trash companies pay are supposed to be based on the gross receipts they receive from customers for picking up trash. But since September 1994, some of the companies have also paid a percentage on the money they received for picking up recyclables and yard waste.

County officials say that, although the companies should not be charged for picking up recyclables and yard waste--material that is kept out of landfills--there is conflicting language in the county’s ordinances that caused the possible overbilling.

Martin played down the significance of any possible overpayment, saying that the fee was calculated based on the amount of money the county Solid Waste Department needs to operate and perform its mandated duties. At budget time, the department determines its annual operating needs and charges companies accordingly.

So, Martin says the department apparently was not paid a surplus by the firms--although individual haulers may have been paying more or less than they should have.

“Look, it’s not as if there are big bags of money stashed away someplace,” Martin said. “If there was an underpayment or an overpayment during the year, we would have gone back and fixed it . . . but that’s not the case.”

The problem according to Martin is that the fee paid to the county is not consistently applied by each of the trash haulers.

“We’re trying to work jointly with the haulers to eliminate these kind of inconsistencies, but to do that we have to do complete audits of all the haulers,” she said.

But officials from some of the trash companies said they believe they have overpaid and should get that money back.

“In the past when we have made a mistake and for some reason underpaid, we’ve had to pay it back immediately,” said GI’s Mike Smith. “So yes, we expect to get that money back somehow.”

Smith said he first heard about the possible overpayments in March after getting a copy of the memo and said he was confident that the haulers and the county can work out a new standardized fee.

The next meeting of representatives from the Solid Waste Department and the trash companies is scheduled for 1:30 p.m. today in the county Government Center Multipurpose Room.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Trash Company Fees

The chart below shows the amounts paid to the county Solid Waste Department by the five trash companies serving unincorporated areas of the county. It also shows the total receipts the companies collected from their customers in unincorporated areas. The numbers are taken from quarterly reports filed by the companies between September 1994 and March 1996.

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Adjusted Company Paid gross receipts E.J. Harrison $295,517.82 $1,291,901,82 Ojai/Rubbish Control $121,820.22 $199,740.42 GI Industries $45,568.22 $187,255.42 Hillside $57,488.74 $215,223.80 Las Virgenes $26,221.70 $152,400.82 TOTAL $546,616.70 $2,045,522.28

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Source: Frank Erbeznik of the Ventura County Solid Waste Department