Circular File: A Tale of Four Cities

By the slimmest of margins, voters in Fresno, Calif., overturned the city council’s decision to privatize garbage collection. The council was motivated by a $2 million budget deficit and its recent success in outsourcing commercial waste services. They saw extending privatization to residential collection as a way to avoid laying off public safety and other city employees.

Nonetheless, with only 27 percent of the voters casting a ballot, opponents won a narrow 862-vote victory. Faced with the lack of anticipated revenue, the city council subsequently voted to fill its budget hole with service cuts and by laying off as many as 20 city workers.

The Fresno vote came almost two years after Toledo, Ohio, privatized its residential garbage services. On the one-year anniversary of that change, Toledo officials noted they had lost about $4 million on trash collection before outsourcing. Now they have an income stream from contract payments, better service and the opportunity to devote more resources to protecting public safety and other city functions. The second anniversary passed quietly. Toledo residents are happy with the change. Clearly one thing that helped was the contractor’s determination to hire city sanitation workers who already knew the ins and outs of the city’s streets. Their knowledge aided a smooth transition.

Toronto recently privatized residential collection in half of that city. In addition to saving the city C$11 million a year, the private contractor has far fewer service complaints than city employees.

At the same time as the Fresno vote, Kevyn Orr, emergency manager for Detroit, announced privatization of that city’s waste services was one of several measures to avoid a bankruptcy filing. Privatization would guarantee weekly trash collection, allow for additional bulk waste pickups and save the city $15 million a year.

Unions representing city workers oppose Orr’s proposal, arguing their members would lose their jobs. However, a spokesman for Orr noted that workers would be offered jobs with the winning bidder, as happened in Toledo and other successful privatizations. The spokesman also noted that nearby Flint, Mich., outsourced its garbage services, citing a “seamless” transition and improved services. Even though Detroit had to declare bankruptcy before moving forward with privatization, it remains an option as the city rebuilds itself.

These cities represent just a few of the local governments that have responded to financial pressures by finding ways to lower costs and focus on providing services that cannot be provided by the private sector, such as police and fire fighting. Residential solid waste and recycling is one of the most commonly outsourced services because the change can be made quickly and the cost savings are immediate.

Yes, privatization can be controversial, as Fresno shows. Outsourcing opponents argue it eliminates public responsibility for protecting public health. Yet, they ignore the fact that private waste management and recycling companies safely protect public health throughout our country. In addition, two of America’s most aggressive recycling programs, those in Seattle and San Francisco, depend on private contractors for their high recycling rates.

Outsourcing gives public sector waste managers the opportunity to see the big picture. They can set service, recycling and other goals while allowing the private sector to use its efficiencies and flexibility to figure out the best way to meet them. As local governments look for ways to use their resources as effectively as possible, they will find relying on the private sector will be one of their greatest assets.