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bottles and cans

Fraud, Subsidies Bankrupting State’s Recycling Fund

bottles and cansThe California legislature should restructure the state’s recycling fund, cracking down on fraud and possibly eliminating subsidies for beverage manufacturers paying processing fees, according to a state audit.

The Sacramento Bee reports auditors found persistent deficits in the recycling fund, and conclude “immediate action is needed to ensure the continued viability of the program.”

Per the program, beverage distributors pay the state for each eligible can and bottle sold in California. They then pass the cost on to consumers, who can cash in the recyclable containers for a California Redemption Value (CRV) payment.

The audit, however, found the money beverage distributors pay into the system often doesn’t cover the CRV payments going out. In three of the last four fiscal years, funding gaps exceeded $100 million.

The report suggest changes to the system the legislature could make to stop losing money such as:

  • Axe subsidies for beverage manufacturers paying processing fees. This costs California between $60 million and $80 million a year.
  • Remove a provision allowing beverage distributors to keep 1.5 percent of what they owe the state.

Fraud is also costing the state money because consumers can cash in bottles and cans purchased outside of California.

New rules in California that went into effect this year aimed to crack down on recycling fraud by preventing out-of-state residents from redeeming large loads for money at state-run recycling centers.

Recycling fraud is a problem in other states as well. Fraudulent recycling of glass bottles from out of state is costing Massachusetts tax payers millions of dollars, CBS reported in July 2013.

Photo Credit: bottles and cans by Wessel du Plooy / Shutterstock.com


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