Two major things occurred to cause this bankruptcy; the State saw that the program was running a surplus and continuously borrowed against it, and, when the program was starting to lose large amounts of money through this borrow and spend practice the program began to succeed in its original purpose.
The Beverage Container Recycling Fund (BCRF) has a revenue of $1.2 billion per year from the small deposit that is charged for beverage containers and are meant to be reimbursed to the consumer when the container is recycled. The original goal of the program was to hypothetically have all the deposits paid back to the consumer and have a (near) 100% recycling rate of these containers. There is a very informative page on this put up by Californian's Against Waste(CAW) for more background information.
A great article from the Mission Local goes on to describe the program.
California’s bottle bill program, in place since 1986, charges consumers a small deposit for beverage containers, which is reimbursed to them when they recycle. Each year, around $1.2 billion in deposits pass through the Beverage Container Fund. The fund was designed to cycle deposits from manufacturers to consumers to recyclers, theoretically leaving it with a zero balance.The article goes on to explain that since the recycling rate remained at “50% for decades”(though this figure may not be accurate) the fund generated a huge surplus. This deposit became a fee of inconvenience and generated huge money for the state. The excess money went, through various venues, towards subsidizing the industry and creating a type of dependency on the funds for administrative and operating aspects.
The system was a shining example of a program that not only pushed an industry but attempted to affect behavior change and protect the environment. A 2002 report entitled “Understanding Beverage Container Recovery – A Value Chain Assessment” showed that California's program had been rather successful;
In the study year of 1999, California’s unique redemption system achieved a redemption rate of 69percent and targeted 79 percent of container types, for an overall recovery rate of 54.5 (373 containers per capita). California’s program was greatly expanded in 2000 and the percentage of containers redeemed has initially declined. It should be watched closely as it continues to adjust to this expansion.The report went on to show that California was recycling beverage containers at dramatically higher volumes than in states without deposit laws. It even called California's system unique and the most cost-effective in the nation. The word must have reached the legislature because they saw this fund as a piggy bank to borrow from. The state legislature borrowed around $415 million from the BCRF from 2003-2009.
According to [name redacted] from [a highly respected waste issue/recycling non-profit];
[The $415 million was] all loans in Budget Acts from the Bottle Bill fund (BCRF) to the General Fund. The general fund pays for everything that is not a special fund program, so schools, prisons, etc. The loans carry the condition that they be paid back with interest, and that they do not interfere with the program, but both aren’t really enforceable because the legislature can (and has) postpone repayment, and a $99 million loan was made in the most recent budget act despite the not-so-secret fact that the fund was in trouble.After the state continued to borrow against this program, they were warned of the danger to the funds. On June 23, 2009, the Department of Conservation advised that an 85% reduction in costs would be necessary to keep the program going and to maintain the program's functions. The legislature, instead of protecting this fund, borrowed $99 million to help cushion the State's depleting General Fund.
The “loans were supposed to be repaid this year, but the Legislature postponed repayment until 2013, while transferring millions more out of the fund in 2008 and 2009.”
Because the economy has been down and the eco-movement is on the rise, more and more Americans are recycling. In fact; “from 1990 to 2005, the amount of MSW [Municipal Solid Waste] going to U.S. landfills has decreased by 9 million tons and continues to decrease each year.”
I would love to see a graph or graphic of the United States Recycling Statistics and patterns by date and regionality. If I had the data and programing capabilities, I would do it myself but it would be a great reference to have available, but enough of the tangent.
The facts that the State was siphoning money from the fund and that more than 85 percent of beverage containers were recycled in the first six months of 2009 meant that the BCRF had less money, about 15% of the actual fund to pay for all of the programs and the State decided to cut funding to centers.
These cuts mean a horrible blow to California Jobs. According to an article in the Sacramento Bee;
The number of supermarket parking-lot recyclers has grown gradually in recent years to about 2,100. But two of the largest operators, Tomra Pacific and NexCycle, announced the shutdown of about 90 centers recently, laying off more than 100 workers.Another article from the Monterey Herald mentions at risk youth who are employed at these centers;
Scott Dosick, spokesman for the California Association of Local Conservation Corps, said the state's 12 programs typically employ 4,000 youths, but cutbacks this year have eliminated about 500 of those jobs.(Also see the LA Times article on this for more.)
This is a pressing time in America when jobs are few and investment in the green economy is what many, including myself, believe can save our Nation's future. Now is not the time to be cutting jobs from this field, now is the time to invest in it. I call upon the Legislature to not only rectify this situation but increase investment in the system. I do not believe, as some say, that this proves a "systemic flaw in the state's recycling strategy” I say that the actual legislative process and practices are what caused the bankruptcy of the fund and it is those practices that need to be addressed.
There was a bill that was attempting to provide a remedy to this financial situation, SB 402 by Senator Lois Wolk (bill analysis found here). This bill was supported by many organizations such as Californian's Against Waste and the Sierra Club alike. According to the Californian's Against Waste the bill would;
Balances the Bottle Bill Fund by ending program exemptions and decreasing the 10 cent CRV threshold to 20 ounces from 24 ounces, ending the exemption given to non-bottle-and-can beverage containers, and other measures.This bill was unfortunately vetoed by the Governor for a long list of “reasons” which CAW responded to quite brilliantly. All in all I am highly disappointed in California for allowing this situation to occur. I had hoped we were more intelligent in our money management but apparently we are not and now one of our best programs is suffering from it, as are those who depend on it to survive.
There is also coalition of recyclers (including Tomra Pacific and NexCycle) suing California over this and over losses in their industry as a result of this debacle. I just hope a real and lasting solution to this problem presents itself or a bill gets gutted and amended to reintroduce the Wolk language.
If you live in California, PLEASE CALL YOUR ASSEMBLYMEMBER OR STATE SENATOR, and ask them to concentrate on this problem.