Details

Since 2002, the California general fund had borrowed hundreds of millions of dollars from the Beverage Container Recycling Fund. Between 2007 and 2009, an additional 166 million dollars was borrowed, and there was not enough money left in the fund to make scheduled recycling payments.

In early 2009, California Governor Arnold Schwarzenegger proposed a relief plan involving targeted cuts and on compressing subsidiary efforts, such as for public education and recycling incentives, into a new program of competitive grants, but legislators rejected the plan. A bill also introduced in 2009 – which would have increased deposit values, added several container types to the system and implemented a number of other changes that would have strengthened the Recycling Fund – was vetoed by the governor.

As a result of the deficit in the fund, the state reduced handling fees and funding to several recycling-related programs by 85%. Processing fees were also reduced. In November, more cuts were made to processing payments, and and handling fees were eliminated entirely.1 This drastic decrease in income caused many redemption centers to close.

The 2010 Assembly Bill 7 was intended to restore the Beverage Container Recycling Fund to working order. It was enacted as an urgency measure on March 8, and most of the provisions are only effective for a few years.

The most relevant provisions of the bill are as follows:

• Effective February 1, 2010 through June 30, 2012, Distributors are required to make CRV payments 2 months after sale of a beverage (the previous requirement allowed 3 months).
• Requres all the funding that was reduced in January through June 2009 to be paid back to the entities that suffered the cuts.
• Protects the money in the fund from being used, loaned, or transferred for any purpose other than those originally described in the law.
• For the 2009–10 fiscal year only, the eight million two hundred fifty thousand dollars ($8,250,000) is appropriated to the
  California Conservation Corps.

More information about the bill can be found in the Department of Resources Recycling and Recovery notice, "AB 7 (8X) Implementation and Update on Proportional Reduction Payments" [PDF,312kb] issued on March 11, 2010.

The California Legislative Analyst’s Office (LAO) produced a report on March 18, 2010, summarizing the state's deposit system and the events leading to the funding shortfall. The report also offered suggestions for additional actions to bring the fund back to solvency. The 2010-11 Budget: Funding and Policy Options for the Beverage Container Recycling Program [PDF,419kb]

Progress

January 15, 2010: Introduced

February 4, 2010: Passed third reading and sent to Senate

February 17, 2010: Amended in Senate

February 18, 2010: Urgency clause adopted; sent to Assembly

February 25, 2010: Enrolled and sent to governor

March 8, 2010: Approved by governor

Footnotes

1. Source: California Department of Conservation. " Beverage Container Recycling: Proportional Reduction in Payments" http://www.calrecycle.ca.gov/BevContainer/Payments/Reduction/default.htm