Charges for Services – Charge a Fee for Blue Cart Recycling

Revenue: $18 million

Currently, the City provides recycling services to 240,000 households.  Only households which receive City garbage collection, 1 to 4 unit buildings, are eligible to receive recycling services.  Participating households are given blue carts into which recyclable materials are deposited, and these carts are picked up every other week.  There are approximately 220,000 blue carts currently in use.[1]

The City provides garbage collection services to 600,000 households, which means that only approximately 40 percent of the City’s eligible households presently receive recycling services. 2011 spending on recycling is shown in the table below.

Total Positions

Salaries

Fringe Benefits

Total Compensation

Motor Truck Driver

52

$3,654,000

$1,278,900

$4,932,900

Sanitation Laborer

52

$3,345,600

$1,170,960

$4,516,560

Number of Trucks

Daily Cost per Truck

Annual Cost Per Truck

Total Truck Costs

Truck Costs

45

$343.67

$86,605

$3,897,218

Total

 

$13,346,678

Source: Department of Streets and Sanitation
Note: Truck costs assume 252 operating days annually

Under this option, the City would charge households receiving blue cart service in order to pay for the cost of operating the program.  Similar to the pay-as-you-throw (PAYT) system described in a previous option, the City would charge property owners $100 per year for each 96-gallon recycling cart used.[2]

An annual fee of $100 per cart would raise approximately $22 million annually.  Of course there are costs associated with billing and collection which must be factored into the equation.  Billing property owners instead of individual households, which is similar to the City’s method of billing for water service, would make administration easier for the City.[3]  Property owners would have the option of reducing or increasing the number of carts they use.

One way to estimate the administrative costs of this program is to look at the billing and collection costs for water service, for which in 2011, the City budgeted $8.4 million, including healthcare and pension costs.[4],[5]  In the PAYT option, we assumed that it would cost the City a similar amount to administer the billing and revenue collecting aspects of PAYT system. However, if the City were to charge only for blue carts, and assuming that administrative costs are directly proportional to the number of households served, these costs should be 40 percent lower.  That amounts to $3.4 million, which we have rounded up to $4 million given the imprecision in this estimate.  This does not take into account a reduction in potential recycling carts in services due to the imposition of the fee.

Thus, the net revenue this option would generate is approximately $18 million annually.

Proponents might argue that the recipients of blue cart services are receiving a service that other City residents do not enjoy. It is unfair to provide some residents a service that other City residents do not receive based solely on the section of the City they happen to live in. Thus, charging the recipients of this service a fee levels out this inequality. Opponents might argue that it is unfair to charge residents for a service most of them did not expressly request. Additionally, charging for recycling services could decrease the likelihood of recycling which could in turn have a negative effect on the environment and reduce revenue generated by recyclable materials. Lastly, charging for a service like recycling would increase the likelihood that the City begins charging for similar services like garbage collection that some might view as a core City service for which residents should not be charged.

 

Budget Details

Fund: Corporate Fund, 0100 Type of Revenue: Local Non-Tax Revenue, Charges for Services, Other
The appropriation is located on page 17 of the 2011 Annual Appropriation Ordinance.

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

 

 

 

 


[1] City of Chicago. Laborers Union Arbitration on Recycling Privatization. Exhibit 2 Cost Comparison.

[2] There are several different ways to implement a PAYT system.  Approaches include a subscribed can or variable can system, in which users pay a fee based on the number and/or size of the garbage cans.  There are also bag programs, in which users “purchase bags imprinted with a particular city or hauler logo, and any waste they want collected must be put in the appropriately marked bags”.  The City’s failed blue bag program for recyclable falls into this category.  Additionally, there are tag or sticker programs which “are almost identical to bag programs, except instead of a special bag, customers affix a special logo sticker or tag to the waste they want collected”.  Also, there are weight-based programs that attempt to charge users based on the actual weight of the garbage they throw out.

Source of Description of Different PAYT System Descriptions:

Skumatz, Lisa A., Ph.D. and David J. Freeman, “Pay as you Throw (PAYT) in the US: 2006 Update and Analyses”, prepared for US EPA and SERA, by Skumatz Economic Research Associates, Superior CO, December 2006. pg. 3.

http://www.epa.gov/osw/conserve/tools/payt/pdf/sera06.pdf

[3] While property owners would be billed for the recycling carts, it is likely that some portion of the cost of recycling collection would be passed from property owners to their tenants in the form of higher rents.

[4] City of Chicago. “2011 Annual Appropriation Ordinance.” pg. 261.

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

[5] Of the $7.27 million, Revenue budgeted $3.29 million in personnel expenditures.  Assuming that fringe benefits are 35 percent of salary, the fringe benefit cost $1.15 million, which brings the total budget for this function to $8.42 million.