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Tuesday, July 29, 2014         

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Don't extend recycling subsidy

By Star-Advertiser staff

POSTED:



The City Council is sending mixed signals to the public with the consideration of Bill 36, which suggests that lawmakers are wavering in their commitment to fairness in how fees are assessed.

Just a few short weeks ago, the Council rightly passed Bill 47, and if Mayor Peter Carlisle signs it, for-profit recycling companies would no longer garner a subsidy they've received in varying amounts over the past 20 years. The primary beneficiary has been a single company, Schnitzer Steel Hawaii Corp., which dominates recycling activity on Oahu. Since 2001, recyclers have received an 80 percent discount in tipping fees that the city ordinarily would have charged for dumping recycling residue at Waimanalo Gulch Landfill.

For Schnitzer, the subsidy has meant a savings of $19 million since 1998, the earliest for which figures are available. While waiving fees might have made sense during the fledgling period of Honolulu's recycling efforts, that time has clearly passed. The Council was right to rescind this subsidy, and Carlisle should sign the bill.

Nonprofit groups, as well as one-day noncommercial cleanup events, would continue to be exempt from the tipping fees, as they should be.

Unfortunately, the Council seemed to have acted on Bill 47 only once an escape hatch had been put in place. Two bills were advanced on the same day, offering alternatives to cut or cap, rather than eliminate, the subsidy. Bill 36, the approach to reduce it gradually, now appears to have Council favor and is up for a final vote Friday.

Under this proposal, for-profit recyclers would have a 60 percent discount for the fiscal year starting July 1; the discount would fall to 40 percent and then 20 percent over the two budget years following. Schnitzer executives argue that this would give them time to make adjustments in their operations to compensate for the resumption of normal charges.

The trouble with this kinder-and-gentler timetable for withdrawing the subsidy is that it shortchanges two constituencies: Oahu real-property owners who pay the taxes, and the residents who need services from the city. Many people fall into both categories. Taxes have been going up and recession-driven budget cuts have forced reductions in services. Where do they go for kinder, gentler treatment? Further, continuing fiscal strains demands that the city find ways to increase its revenue, as well as cutting costs. Bill 47 was one small step in the right direction.

Instead, the Council appears poised to kick this particular can down the road. One provision of Bill 36 requires the Department of Environmental Services to report to the Council on the effects of the discount by the end of 2012, and to recommend whether to continue, repeal or change the discount. It would make a lot more sense to rescind the discount now and then reinstate something if some company can make the case for it. As it is, the current law does not require companies to open their books and demonstrate need; perhaps if they're better motivated, they would do so.

The city meanwhile has many uses for that revenue in service of a public that, judging by reports of profitability in the recycling sector, is more deserving of a break. One resident testifying against the discount, Matthew LoPresti, checked the average scrap prices over the past decade and found it had more than quadrupled. Hardship subsidies, meant to encourage a desired industry in its startup phases, hardly seem logical now.

Let Bill 47 become law. The city of Hono-lulu can no longer afford the subsidy.






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