Originally appeared in The Wall Street Journalhoteles en Albufeira of Tuesday, May 16, 1995
Today or tomorrow, the Republican-controlled Senate is expected to approve a bill that wouldinstitutionalize one of the worst excesses of the "big government knows best" mentality that has longdominated Congress. It has to do with something called municipal waste control, and it would imposea hidden tax on consumers, businesses and municipalities.
At issue is the power of a regional government - typically a county or a regional authority - to mandatea single location for the disposal of all trash generated within its jurisdiction. By controlling the flowof waste, the regional government can establish its own protected monopoly, and charge whatever itwants for garbage disposal.
hotels in AalborgMany governments use this as a convenient excuse to line their own pockets; in New Jersey, forexample, some regional authorities pass bond issues designed for waste disposal but use most of theproceeds on high-paid consultants and other "overhead" expenses. As a result, a recent study foundthat in New Jersey flow-control areas, disposal costs exceed $100 per ton of garbage - more than twoand a half times the national average.
The costs of this monopoly arrangement get added onto consumers' bills both directly and indirectly. In Jersey City, for example, we're forced to spend money on waste disposal that we would rather usefor schools or police.
The Supreme court ruled last year that state governments can't pass waste-control laws unlessCongress specifically authorizes them to do so. That's what Congress is now on the verge of doing,with the House ready to follow the Senate's lead.
The Senate bill, sponsored by conservative Sen. Robert Smith (R., N.H.), has drawn bipartisansupport. Many Western senators like the measure because it includes and anti-free-market provisionprohibiting the interstate shipment of waste. Many regional governments like the bill because itperpetuates their monopoly on waste disposal.
Flow control emerged over the past 20 years in response to tightening environmental standards, whichcaused many cities and counties to close their old dumps and build expensive new landfills andincinerators. To pay for these investments, local governments imposed high per-ton tariffs or "tippingfees" on garbage disposal, and then required that all garbage generated within their boundaries be sentto those facilities. Now, in the wake of the Supreme Court's ruling, these regional governments areneedlessly warning that they face default on their bonds unless exclusive franchises are protected byCongress.
This is Chicken Little reasoning. A study performed by KPMG Peat Marwick found that New Jerseycould pay off all of its outstanding solid wasted disposal facility debt at cost of $10.39 - $12.67 perton in 10 years, or at a cost of $7.10 - $10.00 per ton in 15 years. These bond amortization costswould be more than offset by the savings local communities could reap once they are allowed to bidout their waste-disposal contracts on the open market.
Hoteles centrales ZakopaneOpposition to waste-flow control comes from a surprising coalition that ranges from the NaturalResources Defense Council to the National Federation of Independent Businesses to the conservativeCompetitive Enterprise Institute. What's brought these diverse groups together?
Business objects to the higher costs paid for waste disposal under flow control - costs that ultimatelyare paid for in part by corporate taxes. Environmentalists object to the concept because they'reopposed to the incinerators set up by many flow-control jurisdictions; in fact, the EnvironmentalProtection Agency has just concluded that flow control provides no environmental benefits. Andconservative groups object to flow control because it represents a statist approach to problems thatwould better be left to the markets.
discount hotels in WindermereOpponents of flow control argue that the proper governmental role in waste disposal is to regulate theoperation of facilities, not to establish regional and county monopolies. A competitive bidding processcould find more cost-effective solutions to even the smelliest garbage-disposal problems.
Yet Congress appears to be ignoring this free-market chorus in favor of the views of sate and regionalgovernment monopolists. Wasn't this supposed to change after last November's election? Instead ofpassing flow-control legislation, Congress should bury it in the trash heap of discarded ideas.