January 15, 2009
State May Seize Nickel Deposits On Unreturned Bottles, Cans
For the first time in 30 years, state lawmakers voted to seize the nickel deposits on bottles and cans that consumers fail to return to the store. The move — the House voted Wednesday, the Senate early today — is expected to generate as much as $25 million annually as the state tries to close its growing budget deficit.
Both the House and Senate took the rare action because they are facing the worst budget deficits in decades and are being forced to consider moves that they have always managed to avoid in the past.
But the beer wholesalers' chief lobbyist, Patrick Sullivan, said that seizing the nickels will lead directly to a price jump for beer drinkers. Wholesalers currently spend those nickels to pay for union drivers to pick up the empty containers, he said, and to pay the state-mandated handling fee that wholesalers pay to the retailers.
"The public is going to pay twice for recycling for the archaic bottle bill," Sullivan said Wednesday. "That money for 30 years has been the people's recycling money. If you take it away, it will result in a major price increase."
But lawmakers say the state deserves to seize the nickels from an estimated 500 million bottles and cans that are never redeemed each year — which translates to an estimated $25 million.
The deposit issue was part of a broader budget-cutting package that was passed in the Senate by a 24 12 vote about 12:45 a.m. today — several hours after a House vote of 111 35 that was largely on party lines. All Republicans in both chambers voted against the measure as a protest that the Democratic majority did not cut enough spending. Democrats countered that the bill included many of the cuts originally proposed by Republican Gov. M. Jodi Rell.
"This will not be the last time that we act on deficit-mitigation measures for this year," said Senate President Pro Tem Donald Williams, the highest-ranking senator. "We do have a difficult economic crisis in the state of Connecticut. ... We have a lot of work to do."
Rell said in a statement early today that she will sign the bill, although she believes the General Assembly must avoid being "a legislature of too little, too late" as the economic crisis continues.
"I'm disappointed that the Democrats' deficit plan falls short of what we need to erase the entire $356 million deficit," Rell said. "I'm also concerned that some of the cuts they did make represent more wishful thinking than real savings. They didn't make as many cuts as we needed, and they added money back — particularly for their own spending — while some of their supposed cuts are based on false assumptions."
The budget bill will reduce the deficit in the state's general fund in the current fiscal year by $131 million, but top Republicans said they believe that the deficit will rise to as much as $800 million to $1 billion for the current fiscal year that ends June 30 when the new figures are calculated in the coming weeks. The deficit is rising because state revenues, driven chiefly by the state income tax and the sales tax, are plummeting. The state's wealthiest residents pay their taxes on a quarterly basis, and the latest collections for the fourth quarter of 2008, due today, are currently down 22 percent. In addition, sales tax collections are down by 3.5 percent because the Christmas shopping season was worse than expected.
With the deficits growing each time the numbers are counted, Republicans complained Wednesday night that the plan written by Democrats covered only the "low-hanging fruit" and did not go far enough in making fundamental cuts in the budget. The Republicans offered an amendment to cut the salaries of all legislators by 5 percent in the current fiscal year as a symbolic move to save $500,000.
The measure was rejected 111-35 on a largely party-line vote. One Democrat said that any Republican who wants a salary cut could do it voluntarily.
Senate Republicans pushed the proposed salary cut to 10 percent in their own unsuccessful amendment, but Democrats said the idea could be considered later in the session.
House Republican leader Lawrence Cafero of Norwalk complained that the legislature was doing nothing to control the rising costs for state employees, including a three-year arbitration award for more than 5,000 prison guards and others that will provide salary increases as high as 6.5 percent in the first year for some workers.
"We don't have the money to pay for it," Cafero said. "I believe in my heart 100 percent that they deserve" the raises.
But top Democrats have said that the prison guards have one of the toughest jobs in the state, and they believe the legislature will take no action on Rell's recent request to overturn the arbitration award. If lawmakers fail to vote within 30 days, the arbitrated award will take effect automatically. With no deep cuts, the issues facing the legislature will only become more dire, Cafero said.
"The kind of stuff we are going to be talking about is mind-boggling," he said.
During the session, one of the biggest issues was the seizure of the nickel deposits. The beer and soda distributors have traditionally hired some of the Capitol's best-paid lobbyists, and since the bottle bill was passed in the late 1970s, the nickels have never been seized. Those days are now over, and the first payments to the state must be made by April 30.
"This is the time to take the money, but it's important for the industry to recoup their costs," said Rep. Christopher Caruso, a Bridgeport Democrat who has fought for years to seize the nickels.
According to numbers given to legislators, one of the biggest beer distributors in the state collected $7.3 million in nickel deposits during the 2008 calendar year. After paying back $5.5 million to consumers for returned cans and paying other expenses, the distributor said he earned about $50,000 for the full year — less than 1 percent of the total collected. At least four beer distributors said they had a net loss on the recycling program after paying the drivers, the handling fees and other expenses.
Christopher Keating is The Courant's Capitol bureau chief.
http://www.courant.com/news/politics/hc-budget0115.artjan15,0,2784880.story
