Wednesday, June 18, 2008

Budgeting Waste

I tend to be very skeptical whenever I hear the term "budget deficit". Back in May, my hometown of Lowell projected a deficit of $6 million for the upcoming fiscal year. Half of that deficit came from our trash collection program which is expected to increase to $4 million next year if no changes are made.

As we all learned in Economics 101, incentives matter. The problem is that everyone is charged the same standard fee each year regardless of how much trash they actually produce. Why bother to reduce the amount of waste you produce or increase the amount you recycle (Lowell has a 7% rate) if you're going to pay the same cost either way?

In response, Lowell's city manager has proposed a new flat fee/pay-as-you-throw system which could lower the deficit, increase recycling, and bring about more fairness in trash collection. The idea is that when you charge people something closer to the actual cost then they will tend to change their behavior.

This is a step in the right direction (even my nemisis at Left in Lowell agrees), but why not go all the way? The city manager is still projecting a $2.5 million trash deficit at a time when cities are struggling to balance their budgets. A complete conversion to pay-as-you-throw could totally eliminate the budget deficit and perhaps result in a surplus.

No comments:

Share BHI content