There is a potential sale brewing and many taxpayers may not realize it. The mayor proposes to sell the municipality's Solid Waste Services collection. At first thought, the sale of the of SWS collection seems like a small issue. The service is provided in the historic core areas of the city. SWS serves approximately 13,000 customers. At first glance one might think what is the big deal? Think again, it is a big deal.
In 1982 the municipality was granted a Certificate of Public Convenience and Necessity by the Alaska Public Utilities Commission. That means that the municipal SWS does not have to set their rates though the Regulatory Commission of Alaska. The Assembly sets the trash rates.
Solid Waste Services, the city's garbage service, made over $2 million in 2014. It had a reserve account of approximately $7.8 million at year's end. SWS has investigated profitable new services and the numbers could look even better. It "ain't broke." So why should it be sold or contracted out? A consultant was hired by the mayor to assign a value to SWS and to make recommendations about the merits of a sale. The plan will work, according to the consultant, if residential rates are raised at least 20.85 percent immediately and commercial rates are raised by 2 percent every year after the sale.
The rates will be held at 20.85 percent only if you trust Alaska Waste, the most likely purchaser of SWS, to hold down the rates once it buys the utility. But when Fairbanks, Kenai and Mat-Su concluded that sales of their refuse services to Alaska Waste might work out for them, they sold their operations and Alaska Waste increased the rates. In 2014, Alaska Waste asked the RCA to approve a 158 percent rate increase for residential customers in Fairbanks, 31 percent in Kenai and 26 percent in Mat-Su. Alaska Waste already charges 20 percent more than SWS for residential service in Anchorage.
Keep in mind that SWS is not subject to the RCA currently and our elected officials set the rates for the trash service. They have done an excellent job of keeping the residential and commercial rates down and still keeping the utility in the black.
The consultant was given figures that show Alaska Waste charges 13 percent more than SWS bills for commercial service. That figure is too low. A six-yard dumpster collected six times a week, service that a restaurant might have, costs a downtown customer $900 each month. Alaska Waste charges $1,407.72. The sale doesn't work out for downtown businesses at all. Alaska Waste will certainly raise the rates for commercial service to the levels that it currently charges, and additional increases are not subject to regulation.
The sale of SWS is a bad deal for residential customers whose rates will increase dramatically. Not to mention the increase to the rates for the commercial customers downtown. But it doesn't end with shareholders, we all benefit from the dividends paid by the SWS enterprise. That $2 million it returns helps keep all our property taxes down.
There is a hearing on the sale scheduled at the Anchorage Assembly Chambers today at 6 p.m. at the Loussac Library.
It is a bad deal for all of the Municipality of Anchorage. It's a short-sighted financial plan that will cause us to lose a well-run operation that makes money for the city treasury. SWS is not broke. Don't fix it.
Jillanne Inglis is a resident of Anchorage and president of the Anchorage Municipal Employees Association, AFSCME Local 16.