In the spirit of municipal cooperation and to prove the city is an efficient service provider, Pittsburgh last year began collecting residential garbage in the Borough of Wilkinsburg, a municipality adjoining the eastern part of the city.
Pittsburgh is charging Wilkinsburg households an average of about $120 a year, while charging its own households about $200.
Originally a one-year deal, the contract was extended to run through the end of 2010. The borough of 6,000 households will pay Pittsburgh about $722,000 annually. Pittsburgh officials estimate the contract will save homeowners about $500,000 over what the private collection company that used to haul trash for Wilkinsburg planned to charge.
Different Charges
Pittsburgh residents want to know why the city is charging people in another municipality less than it charges them.
The Allegheny Institute’s report on “The True Cost of Garbage Collection in Pittsburgh,” released in July, aimed to find out just that, inquiring into the factors Pittsburgh used in constructing its bid for trash collection.
Delving into the 2008 budget, financial forecasts, and industry data, we were able to estimate the cost of garbage collection in Pittsburgh is around $23 million when considering refuse’s share of the operating budget, fringe benefits, workers’ compensation, fuel, and a capital fleet cost.
With 115,000 households in the city, the annual household cost in Pittsburgh is $202, about 68 percent higher than what the city is charging Wilkinsburg.
Big Subsidy
The implications are clear: City taxpayers are subsidizing the venture. If Pittsburgh’s household cost were applied in Wilkinsburg, the bill would be closer to $1.2 million instead of $750,000. That means city taxpayers are making up the $400,000 difference.
At the true cost, the city’s bid would have been more than that of the private operator, who must pay taxes and try to make a profit.
In 1996, Competitive Pittsburgh, a task force charged with studying ways to improve the city’s finances and promote “excellence in city government,” found the city’s garbage collection is an inefficient operation that is lower on performance indicators than both private and other municipal operators. Since then, quarterly oversight reports issued by the state confirm that conclusion.
Plans for More
Pittsburgh Mayor Luke Ravenstahl (D) views the Wilkinsburg garbage collection deal as the launching pad for other city services (building inspection, animal control, etc.) to be offered to smaller Allegheny County municipalities.
Ravenstahl told the Pittsburgh Post-Gazette, “I really believe that we need to be doing this type of thing. You all know, as I do, that the cost of delivering government continues to rise.”
That’s a troublesome trend if the city is deliberately underbidding other providers or simply taking a loss to get its foot in the door. If the city manages to find other interested buyers and does not include all of the vital cost factors of the service, city taxpayers will see larger bills while Pittsburgh officials falsely claim they are making money for them.
Eric Montarti ([email protected]) is a policy analyst at the Allegheny Institute for Public Policy in Pittsburgh.
For more information …
“The True Cost of Garbage Collection in Pittsburgh,” Allegheny Institute: http://www.alleghenyinstitute.org/reports/08_02.pdf
