PRIVATE HAULING FIRMS DON'T ASSURE LOW COSTS

Residential solid waste collection is an issue that typifies a debate over whether certain city services should be publicly controlled or subject to free enterprise competition.

Cape Girardeau officials contend a city-run trash service keeps costs down and assures quality service.

But Richard Sheets, senior staff associate at the Missouri Municipal League in Jefferson City, said Cape Girardeau's solid waste operations are somewhat unique. He said many Missouri cities continue to have private trash haulers handle their solid waste.

Sheets said a majority of Missouri cities have franchises with private haulers for trash service, similar to agreements for cable television and utility companies.

And like utility and cable TV franchises, there's little "head-to-head" competition among trash haulers in most Missouri communities, Sheets said.

"There's not much head-to-head competition among trash haulers except in very small communities," he said. "I really don't see too much competition."

Cape Girardeau formerly contracted with a private trash hauler, before taking over the service in 1974.

Until 1986, the solid waste division was subsidized with federal revenue sharing money and general tax revenues, allowing the city to provide trash service free.

But when revenue sharing was eliminated, the city began to charge for the service a fee that's increased 117 percent since 1986.

This year, the Cape Girardeau City Council approved an 18 percent hike in fees, prompting some residents to argue that competition from private haulers would help keep costs down.

It's not a new issue for the city council. Representatives of Browning Ferris Industries of Southern Illinois have repeatedly urged the city to bid residential trash service. Last year, a split council voted against bidding the trash service, despite BFI's claim it could provide more service at a lower cost than the city was providing.

The debate continues with both sides presenting reasons for and against bidding the service. One man who remembers well what it was like prior to the city taking over solid waste collection is former mayor Howard Tooke.

Tooke said the city used to contract with a private firm to haul residential trash at a monthly cost of about $2 per customer.

But when the city chose to bid the service, the private hauler said he would increase his bid to $3 per month.

"He said he would sign up for another year at $2, but if he had to bid it, he would bid $3," Tooke said. "We did put it out for bid and he bid $3."

The city subsequently took over the trash service, purchasing trucks and other equipment from the contractor.

"With revenue funds, we picked it up for $1.75," Tooke said. "We did it for several years with no charge to the residents using federal revenue sharing.

"We couldn't do that free at the $3 price, but we could at the $1.75 price."

Tooke said he believes then, as now, the city is able to provide "essential city services" like trash, water and sewer for less cost than private companies.

"There's always a school of thought that government can't do it as well as private enterprise," he said. "But they can if they work at it as hard as private firms."

Tooke said there were problems with the private hauler. He said many people simply refused to contract for the service and took their trash to the landfill themselves or simply "dumped it in their neighbor's yard."

But a state mandate in 1973 forced the city to require everyone to contract for trash service.

"I've always felt if it was an optional service, then the city shouldn't get into it. But we were faced at the time with a requirement that everyone in the city would have to have it picked up."

Tooke said that with public control, the city was better able to manage the landfill, which was improperly operated in the past. "I think the city did a credible job over the years," he added.

The former mayor said trash fee increases make the prospect of bidding the service in Cape Girardeau more appealing.

But he said higher solid waste costs are the result of a proliferation of expensive federal and state solid waste mandates.

"Solid waste management is a lot more expensive today," Tooke said. "They're now faced with having to recycle. That's a lot more expensive, and they're not being compensated in any worthwhile way from the state and federal government that's mandating this."

Tooke also said bidding the service particularly to a single company likely would assure higher, not lower, trash fees.

"It's no longer free enterprise," he said. "Free enterprise would be if you had two or more companies operating in the city and you could choose between them. That's competition.

"But when there's just one, you don't have the option of not subscribing to that service."

Sheets said that with more stringent environmental regulations and the advent of recycling in Missouri, much more emphasis is placed on quality of service today.

Tooke said one reason why cities can operate such services at less cost than the private sector is that a private company's interests are with its stockholders, not the citizens of the city it serves.

Also, a municipal trash service isn't operated for profit as a commercial service would be. There also are tax benefits, Tooke said.

"They have to borrow money to invest in equipment, and the city can borrow on tax-free bonds," he said. "They have to pay market price, so capital and equipment costs are more, and they have to figure a certain profit there, while the city only has to break even.

"I don't mind the city being involved in that and I don't consider that a great blow to private industry."

Cape Girardeau's Assistant City Manager Al Stoverink said he doubts a private company could provide city-wide trash and recycling collection for less than the city.

He said the city asked for proposals from private trash haulers in 1988 prior to raising trash fees in 1989. BFI's bid of $9.41 per customer, per month was the lowest of several companies, Stoverink said, but still higher than the city's proposed fee of $8.90.

After the new fee was in place, the city also opened commercial accounts to competitors, which now are served by a few private companies along with the city.

Stoverink admitted that commercial trash rates have remained steady or declined because of the competition.

But he contended commercial trash collection is far different from residential trash service.

"The residential side is a different picture," Stoverink said. "There's not as much flexibility in service that can be provided.

"It can work. It has worked in other communities, but it has also worked very poorly in other communities," he added. "I don't think it would result in lower prices or better service, and all I can compare to is the bids we took five years ago and comparisons to other communities."