The Telegraph-Journal had an interesting article yesterday on a city staff report declaring that cancelling private garbage collection would save the city money:
The city should take full responsibility of trash collection services and scrap the contract with private haulers, a move that would save the municipality $500,000 annually, a city staff report says.
In their review of expenses, city staffers compared the current costs of trash collection to the costs of fully contracting out the service or taking it over completely. They based their calculations on submissions from private haulers who estimated what they would charge if they assumed total control of curbside pickup.
Too bad it doesn’t add up in short term or long term.
In the short term, the city would need to pay $794,000 up-front to buy new trucks AND hire more city workers (remember that pension issue – the one where we, tax-payers, are paying for everyone else’s pension):
Long term is where it get’s even more ridiculous, consider the following:
The final report concludes that while the two alternatives are comparable in price, hiring private contractors to service all 53 routes is not viable largely because the city can’t lay off crews who are responsible for trash collection.
The city’s contract with the outside workers union, CUPE Local 18, guarantees 293 jobs will stay on the payroll until mid-2014, a provision the employee group secured when negotiating pension concessions. This means if the city fully contracted out the collection service, it would have to move the crews somewhere else.
Because the city has a contract the specifies a staffing level number (which make no sense at all) until 2014, they somehow decided that this still saves money in the long term – even the costs are cheaper for going private (factoring in the extra costs for new trucks and employees).
Consider if we keep things as-is until the contract expires.
The city could then switch to fully private garbage collection afterwards – reducing staffing numbers, reducing pension liability, and maintaining a reliable contract cost.
This shouldn’t be a difficult decision, contracting out garbage collection is good for Saint John taxpayers!
Today, an opinion piece captured it perfectly:
Council must weigh full service costs
The growing debate over garbage collection in Saint John illustrates the appeal and the drawbacks of short-term thinking. The city contracts out garbage pickup on 19 routes, while 34 routes are handled by municipal workers. At council’s request, city staffers have investigated two alternatives to this arrangement, from contracting out every route to abandoning private contracts.
These options are comparable in price, but in the short term, the city’s labour agreement with outside workers prohibits layoffs. Even if the city were to shift all garbage collection to a private contractor, it would still be paying the wages of municipal garbage crews until mid-2014. So, city staffers are recommending that the city take over all garbage collection. The appeal of this proposal is the potential savings it would create, which staffers have estimated at $500,000 a year. The drawback is that to service those 19 extra routes, the city would need to spend $794,000 on new trucks and hire four additional workers.
Even on the face of it, this is no bargain. The current garbage contract does not expire until September, 2011. A retooled municipal garbage service would not be available for eight to 10 months, taking the city into 2012. The capital expense of buying new trucks would write off the first year and a half of savings, so council would not see any net benefits until the 2014 fiscal year. Maybe we’re missing something, but that’s roughly the same time as the city’s guarantee of 293 jobs for outside workers is set to expire. Wouldn’t it be just as easy to plan for a smaller municipal workforce in 2014, supported by more private contractors?
Every time council increases the municipal workforce, it drives up the city’s annual financial obligations, from basic payroll costs to its pension commitments. Council must have a full accounting of the labour costs associated with this proposal before it can make an informed decision.
Councillors should review the city’s last three budgets. The cost of in-house labour and servicing the municipal pension deficit make up 60 per cent or more of the city’s spending.
If council wants to save more money in the long run, that is where it needs to cut.
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More great comments from the original article:
John Campbell wrote:
was the cost of pensions for city employees taken into account
owen meaney wrote:
What a joke. The alleged savngs are based on the minimum worker contract, which is one of the main problems. The next contract must remove this clause, and everyone knows it. Keep the 6 workers and have them fill potholes until 2014, then deal with it. In the meantime, the current contract allows for no pension liability. Oh, and the casual mention of spending big money on trucks, and decreasing service. Silly. Imagine trying to get through the south end while garbage pickup is done through the day. Now imagine the trash all over the place because of biweekly pickup. This is a stupid idea, and should be treated like a stupid idea. Stupid, stupid, stupid.
Ella H wrote:
Operating costs drop by 500K….. and on the other side…buy three new trucks, costing about $794,000, and hire four workers ..and those four new workers come with employment expenses – pension,benefits,employment taxes.
So just how is the city SAVING anything? I see an INCREASE in costs to the city.
Colin H wrote:
The city’s contract with the outside workers union, CUPE Local 18, guarantees 293 jobs will stay on the payroll until mid-2014″
I hope the city staff report looks at what the potential savings of contracting it all could be after 2014 (assuming the city doesn’t lock itself foolishly in to a minimum number of employees again). Does there cost projections include fully loaded wage costs including bebfits? Can taking over the contracted out routes require hiring of more city staff and the long term costs of that or can it be done with existing staff?
I look forward to reading the report seeing how the costs and potential savings were estimated.
Riverhill Drive wrote:
Let’s be realistic about what this is all about. The Mayor and his brother are doing anything they can to support unions at the expense of the tax payers. Do you wonder why they asked unionized employees to prepare an analysis that could lead to the addition of more members in their local? The answer was defined from the beginning. I have to give the preparers of the report credit for at least putting honest numbers in their report. Anyone with a calculator though can tell the private route is a much better way to go in the long term. Until we elect a council that is qualified to manage things, this is what is going to keep happening. It’s embarrassing that they think they can convince us of this stuff.
Note: As always, the following post is written by myself as a tax paying citizen of Saint John, and do not reflect the views of any other group or organization!
