Environmental fund raided

By CMTA Staff

Capitol Update, Nov. 20, 2009 Share this on FacebookTweet thisEmail this to a friend

California’s largest single recycling services provider, Tomra Pacific, Inc., filed suit on November 9th against the State of California, claiming $416 million in loans made to the cash-starved general fund from the Beverage Container Recycling Fund are illegal and must be repaid.  Tomra claims the loans have driven the recycling fund into insolvency, causing the state Department of Conservation (DOC) to eliminate payments to recyclers and irreparably harming the state’s 23-year-old effort to reduce can and bottle waste.

Revenue in the recycling fund comes from the nickels and dimes California assesses on cans and bottles and fees imposed on the makers of aluminum, glass and plastic beverage containers.  Formulas dictate the annual level of these “processing fees” but, generally, the more flush the recycling fund, the lower the fees assessed against manufacturers. 

The loans to the general fund from this DOC-managed fund began with $218 million in 2002 and $98 million in 2003.  They were to be repaid on June 30, 2009, but lawmakers postponed the payback until June 30, 2013.  Then when AB32 was passed, Governor Schwarzenegger withdrew $67 million to pay for the initial costs incurred by the Air Resources Board to begin implementation. This year another $100 million was loaned to the general fund.

In June, DOC announced that the recycling fund was insolvent due to a higher level of recycling (a record 74 percent in 2008) without any mention of the loans.

Tomra is laying off employees and says that a substantial amount of cans and bottles won't be recycled by them or others “unless the payments to recyclers increases back to the pre-raid levels”.  On October 20, the Integrated Waste Management Board (IWMB) announced that handling fees to the recyclers would not be paid and processing payments would be reduced by 5 percent due to "a lack of monies in the fund."  Cities and counties, which receive subsidies from the fund to support local curbside recycling efforts, have seen their payments fall from $10.5 million to $1.5 million.

Manufacturers who sell products packaged in cans and bottles will have to pay higher fees into the recycling fund to help restore it to solvency.  Processing fees are expected to increase in the vicinity of 65 percent over the next three months.

Tomra contends that if the loans were not made to the general fund, the recycling fund would have been able to cover its normal level of payouts and that they violate the express requirements placed on each of the loans by lawmakers: “Repayment shall be made so as to ensure that the programs supported by the California Beverage Container Recycling Fund are not adversely affected by the loan.” 

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