Commentary

Politics & Garbage Privatization in Norwalk, CT

The public works director in Norwalk, Connecticut is making a case for privatization of waste collection, estimating savings of over $1.2 million in the first two years. Per The Daily Norwalk:

The city would save $360,000 in fiscal year 2012-13 if it were to outsource garbage collection, says Hal Alvord, director of the Department of Public Works. That figure would jump to $950,000 the following year.

If the plan is not approved, the council would need to add $800,000 to its 2012-13 budget, or the price of four garbage trucks. “Our newest truck is 12 years old,” Alvord said. “If the truck is broken down by the side of the road or you can’t get it out of the garage, the garbage isn’t going to get picked up.”

The cost of pickup by city workers would be $126 per household in 2012-13, Alvord said. This compares to $30 a household for recycling pickup, which is contracted to City Carting. Rowayton, which has contracted out garbage collection for decades, will pay $76 a household.

Eight public works employees are assigned to refuse. The city’s garbage truck drivers get $30.64 an hour, and the laborers get $22.86 to $29.18 an hour. Private sector drivers get $20 to $23 an hour, and laborers earn $12 to $15 an hour.

The hourly rate does not include benefit costs, according to Jim Haselkamp, the city’s personnel director. Alvord said benefits are equal to about 51 percent of a city worker’s salary and 30 percent of a private contractor’s salary.

“You can see right there, that’s the basis for a big chunk of the savings,” Alvord said. “Another big part of the savings that we get in Norwalk is from workers’ comp from injuries.”

Sanitation workers made up 10 percent of the public works staff from 2005 to 2010, but 42 percent of the workers’ comp complaints came from the sanitation department. The regular sanitation claims totaled $538,000. Catastrophic claims — from employees whose injuries prevent them from returning to work — resulted in settlements of $1,206,115 to three people. A total of 1,400 work days were lost to sanitation claims.

[…] If the plan goes through, the eight workers would be reassigned as truck drivers and would be paid less. The city has agreed to give them a one-time lump sum payment of $7,000 as compensation, the amount of money they would lose over a year.

“We took this position on outsourcing solid waste because we had a way of continuing to provide that service to residents, to do it in a manner that provides significant savings of money and protects the jobs and health of our employees because nobody would get laid off,” Alvord said.

Absent any other information, one might think that at the very least this might be compelling enough for city electeds to authorize a procurement. Remember that going to procurement means nothing more than just the government testing the market to see what kind of bids it gets back. They’re not obligated to actually privatize anything if the bids don’t pencil out or make fiscal sense. In fact, governments should be doing way more of this sort of bid process for public services, because at the very least—even if you end up not going to contract—you’ve still gotten a third-party, independent validation of your budget for that particular service, a comparative benchmark of sorts.

But so far, at least based on media reports, that kind of thinking doesn’t yet seem to be at play with some of the electeds in Norwalk, who seem antsy amid current union bargaining. Cutting to the chase, from today’s Daily Norwalk:

Alvord said last week that many council members had not heard the numbers in the case to outsource. He presented that case in an executive session.

“Clearly they don’t understand,” he said. “I don’t know how anybody can sit here and say, ‘I don’t see any cost savings.’ But, you know, some of these positions were set in concrete long before this.”

In other words, pro-labor pols will argue the sky is red if that’s the way to avoid privatization. When policymakers get so cozy with unions that even mentioning alternative management regimes that could benefit taxpayers is verboten/scary/heresy, then it’s time for taxpayers to reassess the fortitude of their leaders. The unions aren’t the root problem; it’s electing sycophantic politicians that offer reflexive deference to labor interests over taxpayers.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.