Streets and Sanitation – Privatize City Garbage and Recycling Collection

Savings: $165 million

Currently, the City collects garbage from 600,000 City households and recycling from 241,000 households.[1] Residents of 1 to 4 unit buildings are eligible for free garbage and recycling collection, although recycling is not available in all areas of the City.  The table below details the positions devoted to garbage and recycling collection and the budgeted costs for these positions in the 2011 budget as well as the estimated costs of operating the garbage and recycling trucks and the waste disposal costs of garbage collection.

Personnel Costs

Title

Budgeted Number of Full-Time Positions

2011 Budgeted Payroll

Estimated Fringe Benefits @ 35% of Salary

Total Personnel  Costs in 2011

2012 Costs with 3.5% Increase in Salary

Sanitation Laborers- Refuse

631

$41,478,522

$14,517,483

$55,996,005

$57,955,865

Motor Truck Drivers- Refuse*

465

$32,509,252

$11,378,238

$43,887,490

$45,423,552

Supervisory and Clerical Staff- Refuse

166

$12,066,707

$4,223,347

$16,290,054

$16,290,054

Supervisory and Clerical Staff- Waste Disposal

1

$64,248

$22,487

$86,735

$86,735

Motor Truck Drivers- Recycling & Compost Collection

89

$5,388,875

$1,886,106

$7,274,982

$7,529,606

Sanitation Laborers- Recycling & Compost Collection

93

$5,262,944

$1,842,030

$7,104,974

$7,353,649

Other Personnel- Recycling & Compost Collection

2

$154,860

$54,201

$209,061

$209,061

Subtotal

1,447

$96,925,409

$33,923,893

$130,849,302

$134,848,522

* Includes 1 Chief Dispatcher Position

Non Personnel Costs

Number of Truck Routes

Daily Cost per Truck Route

Annual Cost Per Truck

Total Annual Costs in 2011

Total Annual Costs in 2012

Truck Costs- Recycling Collection

45

$343.67

$86,605

$3,897,218

$3,897,218

Truck Costs-Refuse Collection

350

$343.67

$86,605

$30,311,694

$30,311,694

Subtotal

$34,208,912

$34,208,912

Waste Disposal Costs

$42,294,993

$42,294,993

Grand Total

$207,353,206

$211,352,427

Note #1: Assumes that the health insurance and pension benefits for these employees are worth 35 percent of their salaries
Note #2. Hours worked are converted to full-time equivalent positions at a rate of 2,040 hours per year
Note #3. This ignores additional costs due to overtime or savings due to personnel vacancies.
Note #4. This assumes that only Sanitation Laborers and Motor Truck Drivers will receive salary increase in 2012
Note #5: Assumes no increase in Waste Disposal or Truck Costs in 2012
Note #6: Annual truck costs assume 252 operating days annually

The table above also details the estimated 2012 costs of these services. Because of contractual increases in personnel costs, the savings from implementing this option would grow in future years.  The 2012 salaries of Laborers and Motor Truck Drivers will be higher due to collective bargaining agreements, which include 3.5% salary increases in 2012.[2]  Assuming no increase in salaries for the other positions or for truck and waste disposal costs, the table above shows the increase in compensation costs over the next year.  Thus, the 2012 estimated budgeted cost of garbage collection and disposal and recycling is over $210 million.

Under this option, the City would stop providing garbage collection and recycling services and instead license a contractor (or contractors) to provide these services to the 600,000 households receiving garbage collection services and the 241,000 receiving recycling services.

In order to pay for the service, the City would make City residents currently receiving garbage collection responsible for the cost, while providing rebates to these households.  If the City were to extend the Condo Refuse Rebate Program (see page 114) to the 600,000 households which would now be responsible for their own garbage collection, the City would provide $75 to each of the 600,000 households to help offset the cost of private garbage collection.

By privatizing garbage collection and recycling, the City could eliminate all positions devoted to these services and no longer pay for disposing the garbage it collects or the operating costs of its fleet of garbage and recycling trucks.  Thus, the City would save $210 million in 2012.  This savings would be partially offset by the $45 million increase in costs due to the rebate program,[3] bringing the savings under this option to $165 million in 2012.  Reducing the size of or forgoing the rebate program would increase the savings from implementing the option.

Proponents might argue that there is nothing about garbage collection that demands that the service be provided by City government.  They would cite the fact that a number of suburban municipalities have outsourced their garbage collection services.  Others may argue that by requiring residents to pay for collection services will encourage recycling, especially if these payments are partially based on the amount of garbage thrown out.  This in turn would have positive benefits for the City’s and the region’s environment. Opponents might argue that pushing the cost of garbage collection onto City residents represents a fee increase when City residents can least afford it.  Further, the privatization of garbage collection would leave those least able to pay susceptible to reductions in service.  Others might argue that reductions in garbage collection because of residents’ inability to pay may have larger negative effects on City neighborhoods than just a decline in cleanliness.  Under the “Broken Windows’ Theory” of policing, neighborhoods that appear to be in a poor condition due to unclean streets, broken streetlights, and crumbling infrastructure are more susceptible to crime than well-maintained neighborhoods.[4]

Discussion and Additional Questions

The savings from this option is only realized if it holds tax revenues constant, while cutting what many City residents regard as a core City service.  However, if the City were to implement this option, it likely would reduce taxes, but perhaps not to the full extent of the cost of the service.

Budget Details

Dept: Streets and Sanitation, 81 Bureau: Sanitation, 2020
Fund: Corporate Fund, 0100 Approp Code: Multiple
The appropriation is located on page 223 and the position schedule beings on page 224 of the 2011 Annual Appropriation Ordinance.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf


[1] City of Chicago. Department of Streets and Sanitation. Sanitation (Garbage Collection, Street Sweeping and Residential Recycling)

http://www.cityofchicago.org/city/en/depts/streets/provdrs/san.html

[2] City of Chicago. “Collective Bargaining Agreement Between Teamsters Local 726 and City of Chicago.” Appendix A.

City of Chicago. “Collective Bargaining Agreement Between Locals 1001, 1092, and 76 of the Laborers International Union of North America and City of Chicago.” Exhibit C.

[3] $75 multiplied by 600,000= $45 million.

[4] Wikipedia. “Broken Windows Theory.”

http://en.wikipedia.org/wiki/Broken_windows_theory