[GRRN] More on curbside -Reply

Bill Carter (WCARTER@tnrcc.state.tx.us)
Mon, 11 Oct 1999 10:48:08 -0500

A couple of quick notes on regressivity and curbside economics:

1. Roger Guttentag pretty well makes my point on regressivity, but I'll
elaborate. Regressivity relates to taxes, not to user fees or prices. Only
taxes can be non-regressive. Almost any fee or price can be called
regressive, that is, a poor person has to pay a larger percent of her
income/wealth for it than a wealthy person does. Even a FLAT garbage
fee is regressive. If Dr. McGowan wants us to have a non-regressive
garbage fee, let's charge everyone a percentage of their income for
garbage service. Or a progressive garbage fee, where higher income
people pay a higher percentage of their income to support the garbage
system. If you use property taxes, you need to be sure taxes on rental
property are only partially passed through in rents so that poor renters
pay the same or a smaller percentage of their income/property to support
the system than the landowners and homeowners do.

My previous comments did not belabor this point, but rather tried to
explain that a PAYT fee is NO MORE regressive than a flat fee. That is,
PAYT at least gives a break for the majority of low-income people who
put out less than the average amount of trash. Yes, some poor people
will pay more with PAYT, others will pay less. If the fact that some will
pay more is a compelling argument against PAYT, then it should be a
compelling argument against the entire system of per-unit fees for
water, sewer, electric, gas, etc.

2. My comments about saving money by shifting materials from the
garbage system to the curbside recycling system assumed that the
recycling system is in place. The fact that a curbside recycling program
may often be a net cost saver rather than a net cost to the overall
system is a separate issue, which as I said is supported by much
evidence but is impossible to resolve with certainty given the diversity of
accounting practices.

OK, let's look at the question of shifting materials from garbage to
recycling. Let's assume you have a garbage collection service and you
add a curbside recycling collection system. Let's say you have a net
cost of $60 per ton of garbage you need to dispose, and a net cost of
$20 per ton of recyclables you unload in a bad market. Assuming both of
your collection systems are being optimized, or that neither is better
optimized than the other, you should expect to save roughly $40 or better
for every ton of recyclables that goes into the recycling system instead
of into the garbage system.

So, it makes little sense, if you already have both a garbage service and
a recycling service, to charge people for using the recycling service. A
good PAYT fee structure has a base fee which pays most of the fixed
costs of the system. The variable part of the fee should be tied strictly to
the amount of garbage set out, because the VARIABLE cost of the
properly separated recyclable materials is NEGATIVE. That is, they
reduce the variable garbage costs more than they add to the recycling
costs, if any.

Most public waste authorities, to my knowledge, use the logic above. It
appears to be private garbage services that prefer to stick with their
"core function" and not to offer recycling at all -- or if they do offer
recycling service to maximize profits -- who want to add service fees
for recycling. It is their nature to charge what the market will bear, not
just to cover their costs. Independent recycling services of course have
to charge a fee if they do not own the garbage system which reaps the
benefit of their diversion of materials.

-- Bill Carter