You are the Chief Policy Analyst for the Finance Department of the Town of Hernando Lane, Mississippi (an unannexed community situated between Hernando and Lewisburg). The Town has a resident population of 8,500 (with 75% of those residents being individuals over 16), and 4 town commissioners. Property taxes are 0.80 cents per $100 of property value, with 1,590 real properties assessed.


The Town Commission is considering how to finance solid waste collection service. The Town has acquired automated waste collection trucks that use an automated arm to empty specific trash containers. The total annual collection costs are estimated at $125,000. The waste facility can handle the projected amount of waste to be collected. The Commission is evaluating four potential plans, one from each town commissioner: (Plan A) provide the containers free to households and pay collection service costs from property taxes; (Plan B) provide the containers to households for an annual fixed fee ($25 per year) and pay collection service costs from property taxes; (Plan C) provide the containers free to adult residents and charge a weekly collection fee of $10 (billed quarterly) to cover service costs, with an extra fee for anything that exceeds the container, and (Plan D) outsource the labor collective service costs at a cost of $25 per resident per year, with the vendor providing the containers to residents for an annual fixed fee ($5 per year), and with the Town charging each adult resident a weekly collection fee of $7 to help cover miscellaneous expenses.

Your assignment is to review each proposal and write a 3-page memo addressed to the Town Commission. You must be clear about your assumptions when you address the following:
• The economic advantages and disadvantages of each financing proposal
• The potential consumption effects, substitution effects, and interjurisdictional competition effects associated with each proposal.
• Your recommendation for which financing proposal the Commission should endorse
• Your recommendation for which financing proposal the Commission must avoid