TESTIMONY OF GROVER G. NORQUIST
PRESIDENT OF AMERICANS FOR TAX REFORM
BEFORE THE SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
MARCH 18, 1997

I. INTRODUCTION

Chairman Chafee, Members of the committee, and ladies and gentlemen in the audience, thank you for the opportunity to address you.

My name is Grover Norquist and I am the president of Americans for Tax Reform ("ATR"). As you may know, ATR is an organization comprised of individuals, corporations, and associations that favor lower taxes, less regulation, and a smaller federal government. We do not accept any federal grant money nor do we benefit from specific federal programs.

I come before you today to speak briefly about the free market, taxes and flow control legislation.

II. AMERICANS FOR TAX REFORM OPPOSES FLOW CONTROL

Americans for Tax Reform believes that flow control promotes wasteful and inefficient practices at the expense of free market principals. It is anti-competitive, anti-taxpayer, and anti-growth. How else would one define the practice of permitting local governments to set up goverm~ent-run trash disposal monopolies that virtually eliminate private-sector competition?

In essence, flow control dictates where municipalities and businesses send their waste, and then artificially sets prices for disposal at above-market rates. These additional expenses are passed directly on to consumers in the form of higher costs for goods and services. In effect, flow control is a stealth tax. It is critical to remember that such costs will not be borne solely by corporate America - individuals, families, senior citizens and persons on fixed incomes will all shoulder the tax burden of flow control, and the larger government bureaucracy that it requires.

Moreover, the concept of flow control goes against free market principles. As you may know, the Supreme Court struck down local flow control regulations in 1994 in the case of Carbone v. Clarkstown, NY. The Court found that state-mandated flow control infringed upon interstate commerce. ATR believes that any interference with unrestricted movement of goods and services undermines the free market, and therefore, harms the American taxpayer.

At a time when Congress is empowering communities and individuals, in such cases as welfare reform and agricultural policy, the last thing our elected officials should consider is concentrating more power in the hands of elected officials. One cannot reconcile a theoretical commitment to a leaner and smarter government with the concept of a state run monopoly that precludes private sector competition.

III. THE COSTS OF FLOW CONTROL

ATR is proud to join with other champions of the free market on this issue. As Jersey City, N.J. Mayor Brett Schundler so eloquently put it, flow control legislation "would institutionalize one of the worst excesses of the `big government knows best' mentality that has long dominated Congress...we're forced to spend money on waste disposal that we would rather use for schools or police."

We've also seen a broad and diverse business coalition form around this issue. Representing. organizations such as the National Federation of Independent Business, the National Restaurant Association, the National Association of Manufacturers, and the Association of Builders & Contractors, the Coalition Against Oppressive Flow Control has written: "Small business owners strongly oppose flow control because it would allow local governments to dictate where small business must send their waste and it allows these governments to set monopoly prices."

In another statement, the National Association of Manufacturers says: "flow control embodies the worst of all government monopolies -- a hidden tax in the form of higher prices, reduced efficiency, a more intrusive government and a stifled free market."

And finally, Karen Kerrigan of the Small Business Survival Committee has explained: "Flow control is nothing short of centralized state planning that harms individuals, families, and businesses. It raises taxes, increases the size of government and hurts American consumers." I couldn't agree with them more.

Perhaps as a way of summary, let me present four arguments against flow control. In so doing, I also hope to answer the Chair's questions about what happens to communities in the absence of such regulation.

1) Flow control is nothing but a trash tax. ATR firmly believes that a vote to reinstate the practice of flow control is a vote to raise taxes. Flow control is a stealth tax -- a hidden burden imposed on families and businesses by artificially inflating the price of waste collection. The American people already pay too much in taxes. We do not need yet another tax increase. Voters know that taxes on businesses are ultimately borne by consumers and taxpayers in the form of higher prices, lower economic growth, and fewer jobs. ATR will work to make sure that the American people understand the harm done to them if flow control is enacted.

2) Flow control costs jobs. We know that flow control means small business can no longer shop around for the best price for its trash collection. Consequently, entrepreneurs face higher prices and have less money to pay their workers or hire new ones. Moreover, with scarce resources being diverted to pay increased "garbage taxes," there is less money for businesses to invest in their own communities. That means fewer private-sector jobs.

3) The cost of waste disposal is declining thanks to free market principles already in place. In the three years since local flow control was suspended, the price of waste collection has dropped. Contrary to the dire predictions of unelected bureaucrats, communities are not just surviving, but actually growing without flow control in place. The free market has forced inefficient government agencies that used to rely on flow control to become more efficient. This has lead to lower costs for homeowners and small businesses. For example, people under the regulation of Virginia's Southeastern Public Service Authority have seen prices cut by over 20%. Within Hennepin County, Minnesota, disposal prices have been slashed by 50%, from a high of $95/ton to $41/ton. In contrast, a study by the National Economic Research Associates reveals that flow control can actually increase the cost of waste collection by as much as 40%.

4) Flow control impedes market-oriented environmental and recycling efforts. The EPA has found that flow control fails to facilitate recycling or create other environmental benefits. I never thought that I would be united with Greenpeace, the Sierra Club, and the Audubon Society, but on this issue we agree. According to one environmental activist: "Flow control laws discourage environmental innovation... Congressional authorization of flow control could inhibit the development of alternative waste management options, including market-driven recycling efforts. Flow control laws unnecessarily inhibit the ability of recyclers and other ecological entrepreneurs to compete in the marketplace."

IV. CONCLUSION

As many of you know, I have relentlessly fought over the years for a smaller federal government and lower taxes. There could hardly be a better example of how Washington could threaten these principles than today's fight over flow control. The lines are cleanly drawn in this baffle. On one side are the flow control proponents advocating a government-sanctioned monopoly. On the other side are the champions of the free market, American consumers, and the millions of small businesses across our nation. The choice could not be clearer.

Americans for Tax Reform strongly urges this Committee to protect American taxpayers and strike a blow for the free market. We urge you to oppose anti-competitive, anti-small business and anti-taxpayer programs such as the proposed flow control regime.