Bruce Hudson, left, and David Sneed work their garbage collection job Wednesday in Red Bank.

An ongoing dilemma over garbage bills has two Hamilton County cities toying with different strategies to keep their revenues up.

For years, East Ridge and Red Bank have paid Tennessee American Water to include their residents' garbage fees on the monthly water bill. Residents were much more likely to pay for garbage pickup if there was a threat their water might be turned off if they didn't, officials said.

But the water company is dropping its decades-old billing service in October, leaving Hamilton County and Chattanooga sewer authorities scrambling over how to collect sewer bills.

East Ridge and Red Bank, whose sewer service is covered by the Hamilton County Water and Wastewater Authority, must make contingency plans to collect the garbage bills, plans that could take a toll on taxpayers.

"We're all agonizing over the cost that will be a burden upon the people, and we want to make our plan as cost-effective as possible," said Red Bank Commissioner Floy Pierce.

Both cities have rolled out a variety of ideas in the harried days of budget planning, including a short-lived East Ridge resolution to collect its own property tax instead of Hamilton County.

"It makes it very difficult to know what to do for budget preparation, switching from one possible revenue source to another," East Ridge City Manager Tim Gobble said.

East Ridge is poised tonight to vote in a 44 cent tax increase that would absorb the garbage fee and do away with a separate $15 fee on each monthly water bill, a move Gobble said is "revenue-neutral."

Red Bank Mayor Monty Millard favors East Ridge's current approach because including the garbage fee in property taxes is tax deductible for homeowners and guarantees a much higher bill collection rate.

But the majority of Red Bank commissioners are leaning away from that strategy because the breakdown of the tax burden would be "totally unfair" to homeowners with expensive houses, several commissioners said Wednesday.

Instead, Red Bank is leaning toward a flat garbage fee of $16 per month -- $4 more than current fees -- and collecting it in-house. Red Bank also is considering a separate 25 cent property tax increase to help cover a long-term street paving project that could involve up to 80 secondary roads in the city.

Incorporating the garbage fee into property taxes could mean tax breaks for some homeowners and tax hikes for others, according to figures from both cities' managers.

"We've got $800,000 and $900,000 houses in Red Bank," said Red Bank Commissioner Ruth Jeno. "It's totally unfair for some people to pay one price for garbage service and others to pay triple and quadruple that."

Which is why East Ridge Councilman Denny Manning said he is "not feeling good" about the idea of a property tax increase.

"If you're going to do something like that, make sure it works the same for everyone," he said.

But the shift could make taxes "a little more equitable," said East Ridge Councilman Darwin Branam, who said a large number of residents would end up paying less for their garbage fee than they are now.

Tennessee American's move to drop the billing service is not yet finalized. Last week, the company filed documents with the Tennessee Regulatory Authority, which must approve the plan, said Kino Becton, who oversees the water company's government affairs. The TRA has not issued a response, Becton said.

Red Bank officials said they hope the state will intervene to keep Tennessee American involved in billing.

"We're playing this by ear, re-evaluating every few months," said Red Bank Vice Mayor John Roberts. "We could amend the budget in October and outsource billing because doing it ourselves may be a pure headache."