Camden County trash authority faces financial, environmental heat

Without taxpayer bailouts, the bonds for Camden County's money-losing trash operation would barely be worth the garbage it takes in, according to credit agencies.

The Pollution Control Financing Authority of Camden County has received $152 million in state solid-waste subsidies during the last decade - more than any other county in New Jersey has gotten - to pay the debt on an incinerator built in the early 1990s.

But that's not enough.

In recent days, leaders of the authority, which handles trash disposal for all but one of Camden County's 37 municipalities, have pressed the state for yet another bailout. If their efforts fail, the Fitch rating agency projects, the authority will default on its $25 million final bond payment, due Dec. 1.

The authority's current budget counts on $20 million in state aid - more than the total that New Jersey set aside for multiple counties.

Collingswood Borough Commissioner Joan Leonard, who has pressed for more environmentally friendly alternatives to the South Camden incinerator, called the subsidy level "just mind-boggling."

"How does the state happen to have that much money to keep bailing everybody out when our taxes keep going up and up and up?" she asked.

Treasury Department spokesman Bill Quinn said the state was working with the authority on a solution for the debt-service payment, "and our goal is to have it in place in advance of that deadline so we avoid any sort of market turmoil."

But he added: "We don't know what the final solution is going to be at this point, and it may or may not involve subsidies. There's no commitment on that at the moment."

The problem began in the 1980s when the state required counties to handle all of their own trash. Camden and other counties borrowed millions of dollars to build incinerators and other disposal facilities, and they charged towns and businesses high tipping fees to cover the cost of the debt.

But in 1996, a federal court ruled that New Jersey's rules were an unconstitutional violation of interstate commerce, ending the guaranteed supply of trash to the Camden incinerator. Since the market opened up to outside competition, tipping fees there have dropped from more than $90 per ton to $65 - not enough revenue to pay off the bonds.

The lower rates are saving taxpayers money in one pocket by taking money out of another.

Five counties received state aid to pay off solid-waste debt last year, and $16.2 million was set aside in the budget Gov. Christie signed in June.

Deputy director David Luthman wrote in a public notice to investors last month that even if the entire $16.2 million went to the Camden County authority, it would not cover the December payment.

With a staff of 20 - down a third from a decade ago - the authority is responsible for the Pennsauken landfill as well as the incinerator, which burns trash from every county municipality except Gloucester Township and converts it into enough electricity to power 25,000 homes.

Led by Sharon Finlayson, chair of the New Jersey Environmental Federation, advocates of closing or at least reducing operations at the incinerator depicted it as a boondoggle in a report for freeholders last year.

The report contended that the subsidies had prevented significant investment in alternatives to burning trash. It accused the plant of contributing to poor air quality that harms South Camden residents, and of emitting greenhouse gases that contribute to global warming, though the authority says it is operating well within permitted levels.

The advocates met with Freeholder Jeffrey L. Nash and authority representatives last year to talk about alternatives to the incinerator, such as dramatically increasing the use of recycling and composting, and burying the remaining trash in a landfill.

Leonard, who attended the meetings, pointed to her borough as an example of how the incinerator could be phased out. Collingswood is increasing recycling every year and used a county grant to sell residents low-cost composters, she said.

"If you're a conscientious customer, you can cut your trash down to one trash can a week. . . . Imagine if we spent our money on building more and more compost facilities and having every resident who pays their taxes get composters in their backyard," Leonard said.

Nash said closing the incinerator was a wonderful idea in theory, "but we need to guarantee the municipalities of Camden County that they will have a place to take out the garbage."

The incinerator's problems highlight a paradox: Producing less garbage helps the environment, but the facility needs to take in a lot to pay off its debt and become self-sufficient.

"That is not the goal of the Camden County government," Nash said. "Camden County wants to burn less material, and we need to encourage composting and recycling and getting product out of the burning cycle so that the towns are going to save money and that the carbon footprint is less."

In February, the system took in 22,151 tons, a record low.

Like many of New Jersey's independent government authorities, the agency also has provided work for those with political connections.

One recent example is Luthman, who was brought on as deputy director in May 2009 at $128,500 a year. The former chairman of the Camden County Democrats founded and chaired a political action committee called the Leaders Fund from 2002 to 2008, when it contributed about $900,000 to Democrats around the state.

Regular contributors to the PAC during and after Luthman's chairmanship include firms that do business with the trash authority, including the South Jersey law firm Brown & Connery.

Brown & Connery employs longtime solicitor Bill Tambussi, who represents the Camden County Democratic Committee and is the personal attorney for party power broker George Norcross III.

Year after year, Brown & Connery takes in more money from its contract with the authority than it does from any other public entity in New Jersey.

Lawyers at the firm last year billed the authority for $628,826, which works out to an average of 10 hours of work every day of the year, including holidays and weekends.

That was a sharp decrease from previous years. A team of attorneys from Brown & Connery billed $1.9 million in 2008, or an average of 30 hours every day, and the firm has taken in $4.7 million in all during the last four years.

In an e-mail, Tambussi attributed the legal expenses to having multiple lawyers working on several complex and long-running lawsuits, two of which involved environmental contamination. In one of those cases, he wrote, the authority has collected $11.5 million in settlement money, which will be used for the remediation of the Pennsauken landfill.