Just before aldermen began debating the Daley administration’s 2009 city budget last Wednesday, Mayor Daley himself looked completely unworried about its fate as he stood in the lounge behind council chambers, telling stories and joking about state and national politics with a group of reporters.

He had reason to feel relaxed about the vote—aldermen ended up approving the budget 49-1, and even some of his frequent critics went out of their way to praise his leadership during rough economic times.

Of course, before voting aye, they also complained and worried aloud for a couple of hours—and nothing seemed to bug them as much as the much-panned new levies on alley Dumpsters.

One alderman after another stood and said the new fees—which would run between $80 and $780 a year for each Dumpster—would be passed on from waste haulers to their customers, thus amounting to an onerous tax on commercial and large residential buildings during an economic downturn. “I have a major problem with the Dumpster tax,” 41st Ward alderman Brian Doherty said in a typical assessment. “It could really hurt smaller businesses.”

But that wasn’t enough to keep Doherty or any of the others from voting to approve it. Doherty noted that the tax wasn’t scheduled to go into effect until April, and he hoped that before then it would be amended or scrapped by a new subcommittee that Ed Burke had promised to form (in a late-hour maneuver designed to get budget skeptics on board, though Doherty didn’t mention that part).

While others made similar arguments, alderman Helen Shiller, of the 46th Ward, went even further, arguing that the subcommittee shouldn’t limit its scope to the Dumpster tax. “Unless we include in this discussion the importance of reusing our waste, making sure that as much as possible of it is recycled, looking at how necessary it is, how it’s impacted, how people are actually doing it, how we can do it better than we’ve been doing it, unless we look at the markets for it, we cannot see the whole picture.”

None of her colleagues responded directly to her remarks, and in an interview, Shiller said she was frustrated that more political and business leaders don’t see how the city’s garbage is tied to its economic future as a potential capital of a green economy. “We are uniquely situated in the city of Chicago—we have the knowledge base, we have the transportation systems, we have the land, and we have the financing potential,” she said. “Think about what would happen if we just looked at the reuse of glass. One problem we have right now is that restaurants and businesses say no one wants to take anything [to recycle] but paper. But if we can create a business that uses glass, we can create jobs that won’t go away.”

Shiller speaks from more than enthusiasm—more than a year ago she helped launch a pilot program in her ward aimed at increasing recycling in a variety of high-density residential buildings, which are served by private-sector waste haulers. She said most of the buildings that participated—20 formally, dozens of others informally—dramatically improved recycling rates and saved money on garbage collection because their recyclable “waste” ended up being valuable. The keys to collecting it efficiently were getting building managers and waste haulers to work through logistical problems such as where the recyclables should be stored, then making sure building staff and residents were educated about the process. “It’s an issue of creating the demand, being a catalyst, and getting people to do it,” Shiller said.

She and First Ward alderman Manny Flores recently proposed an ordinance requiring developers to create space for recycling collection in any new residential building with more than six units. And in a few weeks, she said, she hopes to share a “tool kit” with other high-density buildings around the city to help them replicate what’s worked in her ward. “People keep saying to me, ‘Why isn’t the city doing this?’ Well, the city’s never going to do it.” The city should require and enable people, she says, but they’re going to have to do it themselves.

Markets for recyclable commodities have dropped in recent weeks because demand for the materials from Asian manufacturers has sunk—which is itself a result of Americans buying less stuff. Shiller said that’s why Chicago needs to create more businesses that use the commodities right here. She also notes that landfill space in Illinois is declining, and the cost of trucking garbage to landfills depends with the price of fuel.

All of which leads back to the debate on the Dumpster fee. In a sense, it should encourage recycling, since only garbage bins will be taxed; some aldermen have even been making this argument publicly. But its primary purpose is to create short-term revenue for the city—an estimated $9 million next year.

Over the summer, the city proposed a radical reorganization [PDF] of the city’s private waste collection system and trumpeted the new plan’s environmental benefits. Shiller said she’s not opposed to the idea, since it’s her understanding that similar waste franchising systems have worked in smaller cities and suburbs. “I understand the desire to lesson the impact on our alleys, and to find efficiencies,” Shiller said. “But the other reason it got pushed out so quickly was that it was seen as a revenue source.”

But Chicago officials announced their plan before they’d sold political or business leaders on it, and it didn’t go over well—at all. The city withdrew the plan pending further discussion.

“That’s how we ended up with the fee on Dumpsters,” Shiller said.