The continuing economic slump has prompted government officials to look deep into their policies of providing fee or tax breaks in order to avoid broad tax increases. The City Council has identified such an unnecessary fee exemption given to recyclers and is acting correctly to bring it to an end.
One company, Schnitzer Hawaii Corp., dominating the recycling activity on Oahu, has been provided subsidies of $19 million since 1998 through an 80 percent discount of "tipping fees" charged by the city for depositing recycling residue at Waimanalo Gulch Landfill.
Other companies received similar fee discounts last year totaling about $200,000, ranging from $4,000 to $70,000.
Schnitzer initially pleaded hardship in obtaining the fee break, but that is no longer the case. Former City Council candidate Bob McDermott, an unpaid consultant to a Schnitzer competitor, argued that "the hemorrhaging of more than $2 million of taxpayers’ money per year to this profitable company ought to come to an immediate end."
The Portland, Ore.-based company was provided a $1.9 million discount last year, as it posted profits of $126 million on revenue of $2.3 billion in fiscal year 2010. Company officials said its recycling programs might be at risk if the subsidy was cut, but they later agreed to fully support the programs regardless of the Council action.
Schnitzer dominates Oahu’s recycling activity, handling 100,000 tons of metal a year in automobiles, appliances and other bulky metal items. Competitors of the company understandably described its subsidy as "corporate welfare."
Tim Steinberger, the city environmental services director under former Mayor Mufi Hannemann and now under Mayor Peter Carlisle, said his department introduced the bill last year as it examined cost-cutting opportunities. A Council committee’s action this week to do so was better late than never; the full Council should now quickly follow suit.
While stripping private companies of the subsidy, the Council rightly protected charitable organizations such as Goodwill Industries and Salvation Army in receiving discounts amounting last year to $147,000 and $13,000, respectively. Charities should continue to receive an exemption from paying any fees for bringing recycling residue to the landfill.
The City Council should not discourage the for-profit recycling industry, and Councilman Stanley Chang, chairman of the Council’s Public Works Committee, said he plans this month to propose amendments to provide a "limited discount" to recyclers in need of it.
The issue raises questions about city policies across the board providing corporate handouts that may have been needed initially but are no longer justified. The Council’s action on recycling fee reductions should lead to that further examination in other areas.