Pay-By-The-Bag: Variations on the theme are being used
(from Maine Townsman, June 1996)
By Jo Josephson, Staff Writer

Something interesting happened on the way to the transfer station. Something revolutionary, some would say.

Which is, that with the closing of their landfills and the opening of their transfer stations, a number of Maine municipalities decided to stop paying the entire bill for solid waste management with property taxes and started charging a user fee to cover a major part of the cost of solid waste disposal.

They call such a practice "pay-by-the-bag" (of trash disposed), adopting it in a well calculated attempt to if not reduce at least stabilize the ever rising solid waste costs associated with the local transfer station and the regional incinerator.

A trickle of municipalities adopted the practice at first, beginning around 1989. At last estimate, more than 50 Maine municipalities have adopted some variation of the practice and probably an equal number are now seriously considering it.

The practice is touted as being highly equitable. Households pay directly for what they throw away. The less they throw away, the less they pay. No more do they pay indirectly through property taxes. No longer do their property taxes subsidize their neighbor's trash habits. No longer are their habits subsidized by their neighbor's property taxes.

Needless to say, it is a practice that is touted as not only being highly educational but one that offers real incentives, not regulations, as a way to encourage recycling.

And last but not least, pay-by-the-bag is touted as a way to take some of the burden of waste disposal off the back of the property tax. While not necessarily reducing the property tax, it is seen as a way of freeing up dollars for use in less controllable areas such as education.

Proponents say the practice of paying-by-the-bag is no different than the practice of paying by the kilowatt hour for electricity or paying by the minute for long distance phone calls.

Proponents also point out that the practice is attractive because of its inherent flexibility. Which is to say, there are many ways to do pay-by-the-bag.

You can use it to try and cover all waste management costs or just some of the costs. You can do it with or without curbside pickup. You can do it by the bag or by the pound. You can do it with special or just any old trash bags; you can do it with stickers, or tokens, or cards.

Opponents say pay-by-the-bag discriminates against the poor and the elderly and is not practical in cities with multi-family housing. They also say the cost of administering and enforcing it is not worth it. It encourages illegal dumping and increased burning, some say.

Much has been written about the option nationally. But until last year, there was little to document the practice in Maine.

Then, last June, with the publication of "Solid Waste Management Options: The Economics of Variable Cost and Conventional Pricing Systems in Maine," a report by the Margaret Chase Smith Center for Public Policy, Maine's municipalities got their first formal look at the impact pay-by-the-bag systems were having in 29 towns around the state.

This article reports on those findings; it then goes on to look at how the system works in a number of municipalities around the state, focusing on their different approaches. It also looks at one town and its reasons for not adopting the system.

SOME GENERALITIES

In producing its findings, the Margaret Chase Smith Center study compared 29 Maine towns that had pay-by-the-bag systems in place for at least a year with 28 towns that used the conventional, property-tax supported system of waste disposal. Both groups ranged in population from under 1,000 people to over 5,000. The average population was around 2,500.

Among other things, what the study found was that:

The municipalities with pay-by-the-bag systems in place generated less than half the residential solid waste generated by those without such a program. (An annual average of 19 tons - 380 pounds per person compared to .43 tons - 860 pounds per person).

The municipalities with pay-by-the-bag systems in place on the average spent 43 percent less in tax dollars per person on solid waste disposal than those without such a program. (An annual average of $23.51 per person compared to 541.20 per person).

The total cost per person in municipalities with pay-by-the-bag systems in place was 24 percent less than in those towns without such a program. (An annual average of $31.17 per person compared to $41.20 per person). Which is to say, even when you include the cost of the bag and stickers (an annual average of $7.66 per person), the cost per person is less.

If you assume the average household has 2.8 people, the annual average cost per household comes to $87 a year (with pay-by-the-bag) compared to $115 a year (without pay-by-the-bag) because of the reduced tonnage.

Tonnage and cost aside, the study also found there was little evidence of "waste diversion" from pay-by-the-bag towns to neighboring towns, suggesting that waste shifting may not be a significant problem.

However, the study did find that the implementation of the pay-by-the-bag program contributed to an increase in backyard burning (see article in this issue) and roadside dumping, although the roadside dumping appears to abate after the first few months, according to the study.

That said, a look at some of the variations on the pay-by-the-bag practice follows:

VARIATIONS ON THE THEME

As noted above, one of the attractive qualities of a pay-by-the-bag program is that while its bottom line is to encourage waste reduction, the system is very flexible.

As noted in the Margaret Chase Smith Center report, a town can sell a special plastic garbage bag, or tag, or sticker, or token, or punch card to quantify the amount of waste requiring disposal. In some cases, as in Falmouth, private businesses are authorized to sell the bags, receiving a percentage of the cost of the bag for their efforts.

The Center's report also notes that the method of collecting solid waste differs widely in the pay-by-the-bag towns it studied. It found 38 percent of the municipalities offered curbside collection, usually through the services of a private hauler. In some cases, as in Falmouth, the municipalities contract directly with a private hauler, in others cases, residents contract directly with a hauler.

The Center's report also notes that fees are based on either weight or volume. Seventy-two percent of the towns it studied used the size (volume) of the bag; half of these applied a $1 fee for each 30 to 33 gallon bag that bears an imprint identifying the bag as being eligible for drop-off at the transfer station or pick up at curbside. The remainder of the towns using volume-based systems require stickers sold at a cost ranging from 50 cents to two dollars.

Weight-based systems operate in 21 percent of the towns studied. The fees ranged from two cents to six cents a pound.

Generalities aside, some specifics follow

Curbside: Falmouth

Falmouth (pop.7,684) is one of the few towns in Maine that combines a tax-supported curbside pickup service by a private hauler under contract to the town with a pay-by-the-bag program.

As designed, the cost of the bags covers the cost of disposal at Regional Waste Systems. Residents purchase yellow bags emblazoned with the town logo at a cost of 91 cents each from local stores: 2 cents goes to the stores that cell the ham 10 cents covers the price of the bag itself, leaving 79 cents to cover the current tipping fee of $98 a ton to RWS.

After the first year of the pay-by-the-bag program, the town's newsletter reported that total costs of waste management had dropped by about $80,000 from $276,000 to $196,000, with disposal costs dropping from $116,000 to $80,000. Tonnage dropped from 2,715 tons to 1,850 tons or by about 32 percent, while re-cycling increased from 235 tons to 475 tons.

As Tony Hayes, the town's public works director calculates it, a home in Falmouth valued at $100,000 currently spends about $1.25 a week or $65 a year under the pay-by-the-bag program, based on 1.4 bags a week. The same household is also taxed $34 a year to cover the costs of collecting its waste. The total cost to the household comes to $99 a year.

Drop off: Mercer

Mercer (pop. 601) has a pretty straightforward system whereby bags with the town's name on them are sold for $1 at the town office, transfer station and corner store. There is no curbside pickup in Mercer. Residents bring their bags to the transfer station, which also serves as the town's recycling center. It is open one day a week.

Last year, solid waste management costs totaled $9,955. That included the $51.50 per ton or $4,300 the town paid in tipping fees to Waste Management Inc. in Norridgewock. Last year, income from the pay-per-bag program came to $4,620, reports Mercer Town Clerk Ethel Springer, easily covering the $4,300 tipping fee the town paid to dispose of its 83.9 tons of solid waste.

Springer says the program is working well: recycling is up and tonnage is way down from the 142 tons reported in 1994. She notes an increase in burning permits but no reports of illegal dumping.

By the Pound: Dresden

Like Mercer, Dresden (pop. 1,360) has a pay-by-the-bag drop-off system at its new transfer station/recycling center. Like Mercer, there is no tax-supported collection system, although about 30 percent of the residents have contracts with private haulers.

Unlike Mercer, Dresden charges by the pound. In the beginning the town sold tokens: $1 for up to 15 pounds; $2 for over 15 pounds and up to 35 pounds. According to recycling committee member Bob Haven, at first the town did not want to saddle the transfer station attendant with handling money as he weighed the bags on a simple set of scales. But for convenience sake, the town has slowly moved away from the tokens, so that now residents can pay cash.

Last year, the town received $11,337 in revenues from the system. Last year's solid waste management costs came to about $21,000, including the recycling center operation ($10,000), tipping fees ($5,800), and transfer station operation ($5,400).

Which is to say, the pay-by-the-bag system is more than paying the costs of disposal alone

Haven says the town adopted the system as a way to encourage recycling (the town is now recycling around 50 percent of its trash, says Haven) and to have control over the haulers. Prior to adopting the system residents contracted directly with the haulers.

Free Tags: Durham

Durham (pop. 2,861) has offered free tags for most of the time its system has been in place. When the program began in 1993, the town issued 52 free tags; in 1994 it did away with all free tags; in 1995 it went back to 52 free tags; and just this year, town meeting reduced the number of free tags to 26 a year, while increasing the cost of a tag from $2 to $3. It began by charging $1 a bag.

As Durham's Administrative Assistant Joseph Tarazewich told the TOWNSMAN, by distributing free tags the town has not given the tag system a chance. Solid waste collection and disposal costs come to about $100,000 a year. In 1994, tags brought in $34,000 in income (the use of free tags issued the year before lowered income in 1994 when there was no free tags); in 1995 the tags brought in only $17,000 with the reintroduction of 52 free tags a year, with taxes subsidizing the rest.

Tarazewich notes that more than 150 burn permits have been issued in the town, perhaps accounting for the 100 tons of solid waste that did not show up in recycling.

Option: Houlton

Houlton (pop. 6,717) has gotten completely out of the waste management business, franchising curbside pickup to a local company that runs a private transfer station serving a number of towns in the area. "There are no property tax dollars involved in the equation," Houlton Town Manager Allan Bean told the TOWNSMAN.

Most of the residents of Houlton contract directly with the hauler at a current flat fee of $3.84 a week. But residents have the option to pay-by-the-bag, if they drop off the bags at the transfer station, which also houses a recycling center. Those that choose to do so, pay $1.19 a bag (up to 25 pounds) .

RESERVATIONS

Pay-by-the-bag is not a panacea for all that ails, say the pundits. There are conditions in your community that may not be favorable to such a system.

That's what appeared to be the case in Belgrade (pop. 2,495) which looked briefly into the idea and backed off.

"Two years ago we put out a questionnaire during March elections asking residents how they felt about the idea and the response was less than overwhelming," Bob Simpson, Belgrade's town manager told the TOWNSMAN.

"At the time, the town was in the process of closing the dump and building a transfer station. There was so much money associated with the two - over $1 million - and it was my personal view that had we then asked the residents to pay directly to dispose of their trash, it would have not gone over well," says Simpson.

"People are so suspicious of government and so overburdened by taxes, it would not have been a good idea here," says Simpson, noting also that the small town provides so little in the way of direct public services to begin with.

"There is only a volunteer fire department; the road work is contracted out. The only bang for their buck here is the 70 cents on the (tax) dollar the residents pay for public education," explains Simpson.

Simpson, says another reason for not rushing into a pay-by-the-bag system is that voluntary recycling is going so well - almost 40 percent, according to the state's figures.