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Reaching for
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The City of New York Department of Sanitation (DSNY) budget has now topped $1 billion a year. The NYC Independent Budget Office reported in Feb. 2004 that the budget for disposal and recycling had reached $1.04 billion. Since the City began to export waste from the Bronx in FY 1997, this budget has increased by $359 million or 53%. (This was calculated using disposal and recycling costs in 1998, minus the $390,000 for the initial Bronx export, as compared to current total disposal including export and recycling costs as reported by IBO in 2004). (City of New York Department of Sanitation, Comprehensive SWMP Draft Modification, 1998 and IBO, 2004). The DSNY budget alone consumes approximately 22% of all City residential property taxes. However most taxpayers do not appreciate the costs of the current system, or the savings possible in a zero waste system, since those costs and savings are not clearly visible to them (Hammer, 2002). In planning for a zero waste future, the City must provide sufficient and consistent funding for waste prevention, reuse, recycling and composting. To date, DSNY has viewed these programs as nonessential to its core mission — keeping the streets of the city clean and getting rid of garbage. Budget cuts and later partial reinstatements have been a hallmark of the City’s recycling program. Unfortunately, inconsistent funding can actually waste money and increase cost–witness the recent interruption of certain elements of the recycling program. This change has caused considerable confusion about what is and is not collected for recycling. The overall recycling rate has dropped from 20% before the cuts to around 13% at present (DSNY). It will cost millions to dispel this confusion and re-educate New Yorkers about what they can recycle and when. Efficient and effective zero waste management requires a certainty of funding availability that cannot be guaranteed if budgets are subject to annual review and adjustment depending on the state of the economy, tax revenue and current political sentiment. While the long-term savings of zero waste programs may be significant, many programs require several years of investment before savings are seen. As a result, a review of costs and benefits of these programs needs to be longer term than one budget year. A key example is the failure of the City to really make investments in waste prevention, even though they are likely to result in millions in recurring annual savings for the City. One way to provide stable funding for zero waste programs is to look at sources other than the general tax base. Ensuring a steady stream of adequate funding for zero waste programs is essential to developing a system for the future that will save money and create jobs. Alternate sources range from the simple — applying for grants and stepping up enforcement — to the more complex — Pay as You Throw volume- based pricing. It is important to note that financing and policy are very closely linked and that many of these options require legislation or regulation. Those changes are discussed further in the Chapter 10, Legislation and Regulation. Some combination of the following strategies could raise sufficient revenue to finance many of the programs identified in other sections of the report.
Pay As You Throw: Instead of treating garbage collection as a "free" service, that is paid out of the general tax base, PAYT programs create a utility like system, similar to electricity, water and gas, where a resident is charged based on their use of the system–usually by the volume of garbage they generate. A user fee system can be fairer to City residents than a property tax system. Institutions that currently pay no property taxes currently pay nothing for waste disposal and would have to share the costs of waste handling under PAYT. Also, rather than paying the costs of garbage collection indirectly through property taxes, residents and institutions would be charged based on how much garbage they put at the curb. However, waste prevention, reuse, recycling and composting services must be provided at no charge in order to create an incentive to reduce and recycle as much as possible. There are considerable challenges to successfully implementing such a program in NYC such as devising a simple payment and record keeping system, and ensuring that PAYT does not put a burden on low income residents or create public health problems. Overcoming hurdles associated with apartment residents in multi-family buildings and preventing illegal dumping would also need to be addressed.
More detail on these alternative revenue-raising strategies is provided below. Waste Disposal Surcharge Applying a surcharge to the transfer of waste for disposal enables a municipality to squirrel away monies to build its zero waste infrastructure and programs for the future. No surcharges apply to reuse, recycling or composting tonnages. This mechanism has been successful in other jurisdictions, most notably Alameda County, CA, that has used the revenues to finance recycling-based economic development projects, waste prevention, education and other activities. (A surcharge is added on top of tipping fees that usually cover the costs of waste transfer and disposal. Some portion of tipping fees may also be allocated to provide community benefits to communities that host these facilities.) In the case of the NYC commercial stream, the surcharge would be levied at the transfer station on commercial garbage being sent for disposal on a per-ton basis. The commercial transfer surcharge revenue should be used to finance zero waste business technical assistance programs and recycling-based business development. In the City’s residential and institutional system, the surcharge would effectively be a budget "set aside" by the City, based on the amount of waste sent for disposal, for the necessary zero waste programs. That is, for every ton of residential and institutional waste sent for disposal, the City would commit a specified amount to fund waste prevention, reuse, recycling and composting. The dollar amount should be sufficient to cover the bulk of the costs of these programs, at least until other mechanisms are put in place. While this proposal may look like an unnecessary accounting device, we have noted the City’s willingness to almost spend any amount on garbage disposal while depriving alternative programs of the necessary resources. This proposal ensures that zero waste funding is generated from disposal. It is important to note that a surcharge on its own, without accompanying infrastructure development and improved access to waste prevention and recycling opportunities will not have the effect of reducing overall waste generation. Therefore, the surcharge should be pursued in concert with other zero waste policy and infrastructure improvements described elsewhere in this plan. Implementation Schedule:
Enforcement The enforcement of recycling violations should be increased and their revenues dedicated to the programs that generated the violations. That is, recycling violation revenues should be dedicated to recycling education; revenue from commercial carter idling or on-street queing violations should be dedicated to cleaner vehicle/ fuel programs. Enforcement and the minimal fines need to be increased for multifamily buildings and for institutions that are not adequately participating, which are currently too low to encourage a change in behavior–essentially the same fine as for a single family household. To date, for example, not a single $500 fine has been issued. However, enforcement should encourage correct recycling behavior, not frustrate it. For more detail see Chapter 7, Enforcement. Franchise Fees In Chapter 8, the Transportation Chapter we proposed a commercial waste collection franchise system. In such a system bids would be issued for waste and recycling services in commercial districts so that these districts are each served by one carter, instead of the multiple carters and associated truck traffic, as is the case today. As this system is implemented, carters should be charged a franchise fee — a fee for the right to provide commercial collection services in a district. The revenue from this fee should be dedicated to business education and technical assistance to support zero waste programs, in addition to oversight by the City of the quality of franchise services. Implementation Schedule:
Grants Several State and Federal agencies provide grants to municipalities to offset the cost of programs and environmental technologies. For example, the New York State Energy Research and Development Authority funds the development of energy-saving recycling technologies and Empire State Development funds research and development and capital costs for new or expanding recycling enterprises and projects. The State Environmental Protection Fund was recently expanded to enable it to fund waste prevention and recycling education programs. Similarly, the federal Transportation Equity Acts have focused of opportunities to reduce emissions, traffic and congestion and may offer a variety of funding opportunities to NYC. New York City should take greater advantage of these opportunities to finance a zero waste future. The City can also assist community-based organizations conducting zero waste programs to be viable by supporting their grant efforts and providing in-kind contributions. Zero waste programs conducted by these organizations at low costs and involving communities offer the City substantial benefits in reducing costs for waste disposal. Implementation Schedule:
Fee for Service Fee for service programs could be instituted for other problematic streams, such as the landscaper-generated yard debris that is often left for curbside collection, despite rules against doing so. Residents could be charged for collection of yard debris, and it could be a trial project for the roll out of a larger PAYT program, which is discussed below. Payment of these charges could be managed by a software program, like ProFee, the billing system used by DSNY to charge medical professionals with offices in residential buildings for collection services. Implementation Schedule:
Partnership with Industry Many municipalities have partnered with the recycling industry, remanufacturing industries or brand owners to finance specific programs including education, technology evaluation, market development and advertising. Industries have an incentive to participate because, in the case of the recycling industry they depend on our programs to generate the material they recycle and, in the case of other industries and brand owners, they receive bad public relations if their materials and products are habitually wasted. Literally hundreds of communities have partnered with trade associations and industries to finance recycling education and to provide in-kind services, such as the development of public service announcements, graphics and other valuable tools. In addition, dozens of cities and towns have worked with the recycling industry to test and evaluate new processing technologies and to develop new markets for recyclable materials. New York City should take advantage of opportunities to engage industry members to finance certain program elements, specifically where the programmatic content will not be affected. As noted in Chapter 6, the Education Chapter, partnerships with industry can be a valuable strategy to implement large-scale, simple message advertising campaigns, assuming the City carefully reviews and approves the content. However, this recommendation does not suggest in anyway that the City allow industry- sponsored educational materials in the public schools, which can contain biased and inaccurate messages. Implementation Schedule:
The Bigger Better Bottle Bill New York City should become a strong advocate for passage of the Bigger Better Bottle Bill (A3922-A and S1696-A) currently pending before the state legislature. The bill would expand on the most successful recycling program in New York’s history — the deposit/return system in place for beer and soda. This simple system effectively captures 69 percent of the City’s cans and bottles covered by the program. The new bill would expand the system to include non-carbonated beverages, such as juice drinks, sport drinks, bottled water, teas, and other so-called "new age beverages." In so doing it will remove an additional 2.5 million containers from the waste stream statewide, more than half of those being in NYC (Gitlitz, 2004). The bill will also enable the state to assume control of the unclaimed deposits that are held by beverage distributors in the current deposit/return system and use them to fund reduction, reuse, recycling and composting programs. These unclaimed deposits likely account for approximately $179 million statewide annually. The bill would make $75 million in deposits available to fund New York City recycling programs (Gitlitz, 2004). Public support is strong; a recent survey of New York State voters found that approximately 70 percent of New Yorkers support the Bigger Better Bottle Bill and an even larger 86% support using the unclaimed deposits for environmental programs (Public Policy Associates, 2004). New York City was a critical force behind the passage of the first bottle bill, and given the substantial potential benefits and revenues to the City, should be a major force to pass the Bigger Better Bottle Bill. Implementation Schedule:
Changing the Way We Pay for Garbage Services: Pay As You Throw (PAYT) In New York City we currently pay for garbage services through property taxes. This means that there is no cost savings for those who reduce their generation of garbage and recycle more than others. In addition, tax exempt organizations, such as universities and cultural institutions pay nothing for waste disposal. Overall garbage costs have risen dramatically to over $1 billion annually. It may be time for NYC to consider a new way to charge for garbage services, which rewards those who reduce their waste for disposal and recycle more. One possible system is called "Pay As You Throw". In this section we discuss some of the issues associated with PAYT programs and recommend study and pilot testing in conjunction with a task force that includes strong public participation. Any actual plan for establishing a PAYT system in NYC must include:
Background On PAYT Programs More than 5000 communities in the United States have "Pay as You Throw" programs where residents are charged for the amount of waste that they generate, usually by volume (US Environmental Protection Agency, Could PAYT Offer Hope for New York City’s Recycling Program, 2003). Coupled with this is usually no charge or reduced charges for recyclables or organics collections (dedicated to yard and food waste). In addition some companies are developing technology that could assist with PAYT in multifamily dwellings (US Environmental Protection Agency, PAYT: Apartments/Multifamily Dwellings, 2004). PAYT takes different forms depending on the goals and needs of a particular community. The key feature is that instead of treating garbage collection as a "free" service, paid for by the general revenue tax base as is done in NYC, these programs create a utility like system, similar to electricity, water and gas, where a resident is charged based on their use of the system. So, rather than paying the costs of garbage collection through a tax, residents would be charged based on how much garbage for disposal they put at the curb. System Options There are three types of PAYT systems. The first requires households to subscribe to a service whereby they choose a particular size locking can or toter and are billed monthly based on the size of that toter. Recycling households can usually request much smaller cans and are thus billed less. In the event that they need additional waste disposal, such as a party or special event, they can purchase stickers or tags for their additional waste. While this system is costly to start (cans or toters must be purchased by the City) and administer (billing system), it has the benefit of reducing rats and vermin because garbage is in a sealed container. To ease administration the garbage costs could be integrated into the water billing system. Landlords would generally pay the bills for renters in multi-family buildings in this system. The second type of system requires that households can only put their waste out in city-approved bags. The bags are sold at local stores at a cost that covers the expense of handling that amount of waste. The stores return the revenue to the city. The third system is similar to the bag system, but instead of providing an approved bag, residents must purchase tags or stickers for whatever bag or bin they use. These programs are administratively simple, since they do not involve billing, and minimize start up costs. They could also potentially cover all residents including renters in multi-family buildings. But they do not provide any benefit in vermin control. In most PAYT programs, residents are charged for solid waste, but reuse, recycling and composting services are provided at no cost. As a result, these programs support a zero waste system because they provide a direct financial incentive for the waste generator to reduce and recycle as much as possible. A PAYT program must be implemented along with expanded programs for recycling, reuse, composting and waste prevention. If not, the opportunity for savings will be hampered by a lack of infrastructure for prevention and recycling. PAYT programs can be structured to be revenue neutral, which means property taxes are reduced when PAYT service charges are imposed. The big change often is that those institutions that are currently tax exempt would now be paying for garbage services. Thus, to some degree, PAYT as a way of paying for garbage would be fairer to households in NYC. PAYT could provide significant benefits to New York City. If people generate less waste, the benefits include reduced waste disposal costs — at a cost of more than $105 per ton for garbage disposal, a reduction of even 10 percent would save $31.5 million on disposal alone, in addition to any collection cost savings that might be achieved (City of New York Office of Operations, 2003). The funds generated from PAYT would enable the City to finance education, waste prevention, reuse, composting and recycling in a much more significant way than has been possible in the past–but only if the funds are set up as a dedicated revenue stream. A PAYT program in NYC could also reduce the rat population in NYC, if the City follows Buffalo’s system and institutes a fee system and rigid locking containers. The Buffalo Department of Health estimated an 80% reduction in pest control expenses as a result (Cornell Waste Management Institute, 2001). Low and Fixed Income Households There are several models for combating the regressive aspects of PAYT and insulating low and fixed income residents from negative impacts. In the first, used by San Francisco, San Jose and Los Angeles, low and fixed income households qualify for a discounted rate, anywhere from 15 to 50 percent of costs. Residents would have to show proof of low income, as when applying for the school lunch program, for example. In the second model, usually used in cities with bag or tag systems, free or low cost bags or tags are distributed to residents with other public assistance, such as food stamps, social security. Finally, a minimal amount of free garbage disposal could be provided to all City residents with the amount set to encourage recycling behavior. Low income residents tend to generate less waste than those with higher incomes, therefore there is a fairness rationale for keeping garbage costs low for those residents with low and fixed incomes beyond ensuring affordability and protecting public health. PAYT systems can be designed to address this issue. Another option would be to cap waste disposal costs at a fixed rate, as is done with water charges in New York City. This would ensure that costs do not increase for those who cannot afford to pay. Most waste prevention advocates prefer the first option, a discounted rate, because it still provides an incentive for residents to reduce waste and recycle more. When coupled with strong education and assistance, this can be an effective means of both containing costs and reducing waste. Advantages of a PAYT system The potential advantages of PAYT include the following:
The 1996 Duke University study, supported by EPA, also found that the amount recycled in these communities increased by between 32 and 59 percent, on average (Miranda, 1996). This is largely due to the strong incentive participants have to recycle under PAYT programs. The largest number of PAYT programs exist in the following states: Washington, Minnesota, Iowa, Wisconsin, and Pennsylvania. The US Environmental Protection Agency strongly recommends PAYT programs to American communities as a simple and fair way to encourage good behavior and reduce waste. The EPA web site and newsletter report on experience with PAYT programs in other cities through case studies, research, and other information on how these systems work (see http://www.epa.gov/epaoswer/non-hw/payt/). In 2000, a Roundtable on PAYT for major cities was convened in New York City with support from EPA(Cornell Waste Management Institute, 2001). Significant Challenges to Implementing PAYT in New York City Potential difficulties in instituting PAYT in the City include:
Interestingly, although all municipalities worry that implementing PAYT will increase illegal dumping, according to the US EPA most cities where PAYT has been implemented, have found that illegal dumping is less of a concern than anticipated. Case studies on how PAYT has been implemented in other cities are available at the EPA website http://www.epa.gov/epaoswer/non-hw/payt/. Implementing PAYT in New York City will be challenging, particularly in devising systems that work in multi-family contexts and in insulating low and fixed income residents from the regressive tax potential of this type of system. Nonetheless, the system offers such significant potential benefits that it should be explored, tested and debated for implementation in New York City. A recent study by Hammer Environmental Consulting, Inc. estimates that annual PAYT costs for a household in NYC would be $322 per year or $26 per month and that it could generate $977 million for the City (Hammer, 2002). With a minimum of 5,000 PAYT models to learn from, NYC has an opportunity to benefit from the experience of others when designing a program that meets our goals and needs. At the same time we know that NYC has unique challenges. Therefore we recommend that the City approach this concept with caution, openness and a strong democratic process. A substantial planning effort including a Task Force with broad public participation should be a first step and then several well-designed pilot projects should test the adequacy of any potential PAYT systems. A Task Force is consistent with recommendations from EPA that PAYT programs require a considerable planning effort with broad participation from citizens. The Task Force would have to tackle all of the important challenges--low income rates, multifamily dwellings, city agency participation, efficient administration, illegal dumping and possible public health impacts —while soliciting extensive public input and recommending the best designs for pilot PAYT projects. Implementation Schedule:
Agencies and Institutions City agencies and other tax-exempt institutions generate 1 million tons of waste per year. In the current system they are provided with free disposal — the costs of disposal do not even appear in their budgets. In order to provide some incentive to reduce their waste, the City must develop a plan for, and then implement, a transition to some form of a PAYT system. This is relatively easy for the tax-exempt institutional sector; the City has to merely establish waste disposal rates for institutions and encourage them to participate in waste audits and in waste prevention, recycling, reuse and composting programs. For City agencies, it is a bit more complicated, and the City has resisted even attempting to quantify waste costs for each agency. The City might consider the Federal Government model in which agencies that meet or exceed waste diversion goals get to keep some of the revenues from recycling. That model could be expanded to provide both revenues from recycling and credit for savings due to reduced disposal costs. If agencies do not cooperate with waste audits and fail to make progress toward recycling and reduction goals, increased fines and the cost of waste disposal should be charged directly to that agency as a part of their annual budget. Thus City agencies may need both a carrot and stick approach. Without question, every year city agencies should be required to report their zero waste progress with measurable milestones in the Mayor’s Management Report. Implementation Schedule:
1-3 Family Homes Approximately 2.5 million people live in housing with under 4 units and generate close to 33% of the waste stream (Hammer, 2002). This sector presents the least challenges, and should therefore be the first to implement PAYT after institutions. The program would begin by raising awareness of costs. Homeowners would be provided with a line item on their property tax bill that delineates the costs for waste disposal or an informational mailing could be prepared detailing the costs for each homeowner. After one year of education, PAYT would be pilot tested in at least five predominantly single family districts. Initially, property taxes would be reduced to reflect the amount allocated for waste disposal. As a result, homeowners would not face increased costs, but would have an opportunity to reduce costs overall by wasting less. Once kinks are worked out, the system would be implemented in all low-density districts. Implementation Schedule:
Multi-Family & High Rise Buildings In multi-family buildings it is difficult to track the individuals waste disposal habits and therefore difficult to implement and enforce PAYT systems. The city should identify a number of incentive and operating systems that could be implemented in multi family buildings and pilot test them to determine which is the most viable for different housing stocks. Pilot tests should also evaluate the benefits of locking containers on rat control for the tested district. Once the tests are complete, a public dialogue should begin about how and whether to implement a full-scale program. For example, in some cities where the trash bill is paid by the landlord the city works with landlords to create programs whereby they share the savings that result from waste prevention with their tenants, either in the form of cash, rent reduction or building improvements. This assumes that the landlord has received an equivalent property tax reduction as PAYT is begun. This can create an incentive for the landlord to educate the tenants, for the porter or superintendent to recycle as much as possible, and for the tenants to reduce their waste. In a high-rise context, the city should test garbage meter systems that could be integrated into current buildings and develop new building code requirements that require buildings to integrate design elements that enable implementation of PAYT, waste prevention and recycling in new buildings. Implementation Schedule:
Commercial A PAYT system exists in the commercial sector in New York City where companies are charged by the cubic yard for the amount of waste they generate. However, carting fees set by the City provide no reduced rates for recyclable materials, which would provide an incentive for recycling. There is a limited infrastructure for commercial waste prevention and recycling. There are strong markets for commercially generated paper and scrap metals, but little else. In terms of waste prevention and reuse, few companies have the internal capacity to make real gains, and the technical assistance available has been limited to a few small companies and programs, such as Wa$teMatch in New York City. (See discussion of this program in Chapter 2, Reuse. Second, commercial carters have not promoted or encouraged the use of the limited infrastructure that is in place. As a result, most commercial businesses either do not have the opportunity to recycle and reuse more, or they are not aware of that opportunity if it exists. This experience underscores the importance of implementing PAYT in conjunction with investments in reuse and recycling infrastructure, as well as education and technical assistance, including waste audits. (See report sections on these topics.) Only with this combination of programs and strategies will PAYT help to move New York City to a true zero waste future. Implementation Schedule:
References City of New York Mayor’s Office of Operations. 2003. Mayor’s Management Report Fiscal Year 2003. September 2003. Cornell Waste Management Institute. 2001. Pay as You Throw for Large Municipalities. US Environmental Protection Agency and Cornell Roundtable Report. April 2001. Hammer, S.A. 2002. Cutting New York City’s Trash Costs Through Pay-AsYou --Throw (PAYT). Hammer Environmental Consulting. August 2002. Gitlitz, J., Container Recycling Institute. 2004. Testimony Before the New York City Committee on Sanitation and Solid Waste Management Regarding Resolution #144: Endorsement of the Expanded Bill. Miranda, M.L., et.al. 1996. Unit Pricing of Residential Solid Waste: A Preliminary Analysis of 212 U.S. Communities. Environmental Protection Agency and Duke University. New York City Waste Prevention Coalition. 2002. Why Waste The Future? Alternatives to the Mayor’s Proposed Waste Prevention, Composting and Recycling Cuts. May 2002. Public Policy Associates. 2004. Survey of Registered Voters: Attitudes Toward New York’s Bottle Bill and Proposed Reforms. US Environmental Protection Agency. 2003. Could PAYT Offer Hope for New York City’s Recycling Program. PAYT Bulletin. Winter 2003. US Environmental Protection Agency. 2004. PAYT: Apartments/Multifamily Dwellings. http://www.epa.gov/epaoswer/non-hw/payt/top11.htm
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