Competition between the regional trash authority and Waste Management Inc. will cost Montgomery County $81,288 in shortfall penalties.
According to the Montgomery-Otsego-Schoharie Solid Waste Management Authority annual report released earlier this month, Montgomery County shipped nearly 11,000 fewer tons of trash in 2012 than promised. A long-term contract guarantees the authority 41,734 tons from the county, enough to cover transportation and landfill operating costs at $68 a ton. When tonnage is not met, the county has to pay part of the difference.
Otsego and Schoharie counties will have to pay $33,415 and $4,848 in penalties, respectively, but as they are smaller waste producers to begin with, the penalties don’t cut as deep as the one facing Montgomery County.
MOSA Executive Director Dennis Heaton said there are a few factors contributing to the shortfall.
On a basic level, the county has rarely met its promised tonnage. In both 2008 and 2009, it was hit with $1 million in penalties for not producing enough trash. In 2011, all three counties generated plenty of waste thanks to tropical storms Irene and Lee.
“Imagine your whole house underwater,” he said by way of explanation. “That’s what we took to our landfill.”
By 2012 though, most of the flood debris was removed. Trash output returned to normal levels, but that’s not actually the main reason for the shortfall. Montgomery County, while bound by contract to MOSA, doesn’t have legal control of where trash is shipped. Most independent contractors picking up bags of trash bring them to MOSA weigh stations, and pay $68 a ton to have it shipped away.
However, some businesses in the county contract with Waste Management, a national trash removal company that hauls the trash it picks up to Waste Management landfills.
“Ten thousand tons was diverted last year,” said Montgomery County Board of Supervisors Chairman John Thayer, who also serves on the MOSA board of directors through the end of this month. “Of course we have a shortfall.”
He blames the few businesses contracting with Waste Management for costing taxpayers $81,288.
“That’s my view,” he said, “but you can’t really say that.”
Recently, the county tried to encourage businesses to use MOSA by including a requirement in economic development contracts, but he said Waste Management threatened litigation so the requirement was dropped.
Waste Management spokesman John Skoutelas declined comment except to say: “As a general proposition, we favor the free market. We do what’s best for our customers and the free market.”
In the grand scheme of things, Thayer said the penalties could be a lot worse. In 2012, Montgomery County exceeded 2011 recycling numbers by 35 percent, which knocked the penalties down a bit. Also, shortly after the massive penalties of 2008 and 2009, MOSA renegotiated the penalty agreement to cover only landfill operating costs rather than both landfill and transportation costs. So instead of $68 a ton, Montgomery County’s penalty is less than $8 a ton.
“Looking back, we’ve shaved it down by quite a lot,” Thayer said. “Compared to the fines of five years ago, this is almost inconsequential, but it’s not inconsequential to our budget.”
He said the money will have to come out of the county’s shrinking fund balance, which could lead to future financial pressure.
This penalty will be one of the last any of the counties will have to pay. The service contract that formed MOSA nearly 25 years ago will expire April 30, 2014.
“We still own the property and the equipment,” Heaton said, “but the counties will be under no obligation to us.”