Solid waste collection is one of the most prolific examples of a privatized government service. According to the Michigan State Chamber of Commerce, 71% of local governments in Michigan have privatized this service. According to the 1988 ICMA survey of 4870 cities and counties (40.2% of cities and 23.0% of counties responding) 36% had contracts for residential solid waste collection and 38% had contracts for commercial solid waste collection. Thirteen percent of governments responding franchised residential solid waste collection and 20% franchised commercial. [9]

The success of privatization in the solid waste industry is mainly the result of the following reasons cited by James Bennet and Manuel Johnson: "...in contrast to firms that are regulated or limited to a given service area or route, private garbage firms may adjust to their most efficient size of operation...[and]...trash collection in the private sector should be fiercely competitive and pressures for cost minimization especially intense; large amounts of capital equipment are not required, nor are there any other real economic barriers to entry." [10]

In their survey of Washington, D.C. suburbs, Bennet and Johnson discovered that 29 private firms – at least five servicing any one specific neighborhood – collected garbage at twice the frequency – two times per week – and at roughly two-thirds the cost of public collection ($85.76/month versus $126.80/month). [11]

The Ann Arbor/Ypsilanti Area Yellow Pages list 29 firms providing "rubbish and garbage removal" to residents and businesses in Ann Arbor and its surrounding regions. According to a survey sponsored by the City of Ann Arbor, approximately 44 percent of Ann Arbor's commercial sector already hires the private sector to collect all or part of its refuse on top of paying the 2.63 mills in solid waste property taxes levied to all city businesses and residents for municipal collection. [12] Fifteen percent of the businesses that do not receive any city service report that they "require service more often than [the] City can provide." Fifteen percent reported they were not aware that City service was available. Only two percent cited poor City service in the past as the reason for disposing of trash entirely through a private refuse collector.

For fiscal year 1990, the City of Ann Arbor has budgeted $4.444 million for residential, rear and front-load commercial, special and yardwaste collection. [Inclusion of recycling operations, composting, emptying of City street refuse cans and collection of household hazardous waste boosts the City's total "refuse collection" budget to $5.244 million. The figure excluding these areas will be used here.] This figure accounts for all labor, sick and holiday pay, materials and supplies, tipping fees, uniforms, and vehicle rent. Vehicle rent is composed of fuel, operating and maintenance costs and depreciation and is charged to each department, payable to the Municipal Garage, as a per-hour usage fee.

The above four and-a-half million dollars does not include administrative overhead (both departmental and general City government overhead, the latter reflected in the budget line, "municipal service charge"), retirement payments, life or medical insurance, workers and unemployment compensation or social security payments. These costs are accounted for in a separate cost center entitled "administration." This category has been budgeted $2.285 million this year. Subtracting "administration" from the total $9 million solid waste budget yields $6.715 million. The abridged "refuse collection" budget above, $4.444 million, equals roughly two-thirds of the solid waste budget excluding administrative costs. In order to crudely estimate how much of "administrative" costs belongs to "refuse collection," two-thirds of $2.285 million can be added to $4.444 million resulting in a "refuse collection" total of $5.967 million.

Applying the LGC's savings realization range of 22-30% for residential and commercial solid waste collection, Ann Arbor could potentially cut its annual solid waste budget by $1.31 million to $1.79 million by contracting with a private firm to collect the garbage of City residents and businesses.

At the September 17, 1990 City Council meeting, the council approved a resolution, sponsored by Mayor Jerry Jernigan, to request bids for contracting solid waste collection. However, if Ann Arbor were to consider shedding its refuse collection operations, as did Traverse City recently, all or most of the six million dollars budgeted for refuse collection could be saved and reallocated to other service areas or translated into tax reductions. The only amount the City would pay for refuse collection is the amount it pays a private contractor to pick up the City's garbage.

Load shedding concerns some as a forfeiture of control over price and quality of service. However, shedding solid waste collection would establish consumer sovereignty as each household could choose between numerous suppliers. Price and quality would be controlled by the individual supplier working to better serve the customer and win his service by offering amenities his competition does not: lower price, more frequent collection, higher quantity limits, etc.