California program fights to overcome deficit, fraud

California program fights to overcome deficit, fraud

By Editorial Staff, Resource Recycling

Year-over-year expenditures for California's Beverage Container Recycling Fund exceed revenues by approximately $100 million, according to data presented at a recent Container Recycling Institute webinar.

One part of the problem is that California's recycling program has been too successful. In order to maintain solvency, the state's current break-even point for the beverage container recycling program requires a maximum recycling rate of 70 percent. However, between FY 2006-07 and 2009-10, the recycling rate for UBCs increased from 63 percent to 82 percent, contributing to the current structural deficit.

One potential revenue solution, would be to expand the types of beverages covered under the California system to include all "ready-to-drink" beverages — excluding milk, medical food and baby formula — as well as reassessing the fees currently tied to certification, registration and reporting. For its part, The California Department of Resources Recycling and Recovery (CalRecycle) says it will continue to facilitate a series of focus group workshops on reforming the program and will be presenting the findings to CalRecycle executive leadership and the state legislature.

Also identified as a major problem for the ongoing financial health of the program was fraud.

A joint CalRecycle and California Department of Food and Agriculture pilot inspection program in July-September 2011 identified 2,786 automobiles, 528 rental trucks and 83 commercial trucks importing UBCs into the state at 16 CDFA inspection stations. As a result of fraud, the state is losing an estimated $30-50 million annually.

The ongoing fraud problems have prompted several legislative attempts to fix the problem, including Assembly Bill 1933 — signed into law in September — which requires beverage container material to have documentation on their source and destination.

Also analyzed were the daily load limits that determine the maximum payout for beverage containers. For PET containers, a CalRecycle study determined that nearly 98.7 percent of all PET transactions were for volumes of 80 pounds or less. Since the current daily load limit is 500 pounds, the study determined that the current system makes it easier for fraud to occur.

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