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January 13, 2010

Sign On San Diego

Recycling program to get needed funds
Governor plans to repay millions borrowed by state

Artemio Salas handled bottles to be recycled at Regan Recycling Center in Clairemont.

Howard Lipin / UNION-TRIBUNE

Artemio Salas handled bottles to be recycled at Regan Recycling Center in Clairemont.


5 cents: Minimum deposit required for cans and bottles covered by the California Redemption Value, or CRV, program

85 percent: Bottles and cans recycled in California during the first half of 2009

21.9 billion: CRV bottles and cans purchased statewide in 2008

$1.2 billion: Annual CRV money collected by the state

1,200: Recycling stations near shopping centers statewide

160: Estimated number of recycling stations that have closed since July

SOURCES: California Department of Resources Recycling and Recovery; state Department of Finance; TOMRA Pacific

Gov. Arnold Schwarzenegger is throwing a financial lifeline to California’s troubled recycling program for cans and bottles that should keep it alive for at least several months, even though the long-term prognosis remains uncertain.

His plan will affect tens of thousands of consumers who use recycling facilities in shopping centers to recover the deposits they pay on beverage containers.

In his latest budget proposal, unveiled Friday, Schwarzenegger said he will tap reserves to immediately repay $54.8 million in loans to California’s recycling fund. His action won’t require legislative approval.

Since 2002, state leaders have diverted more than $500 million from the fund for other purposes without paying any money back. The dwindling bank account prompted state conservation officials to slash payments to operators of about 1,200 recycling kiosks starting in July. About 160 of them have closed since then; their owners said they couldn’t pay the bills without state support.

Schwarzenegger’s fix “makes so much sense,” said Dan Regan, owner of four recycling facilities in San Diego . “This news alone is going to fill up our gas tank. We will get through this.”

As part of his short-term strategy, the governor also wants to squeeze in an extra month’s worth of recycling payments from beverage distributors by accelerating their payment schedule. The Department of Resources Recycling and Recovery hopes to net an additional $60 million in 2010, though it’s not clear how many distributors will participate unless the Legislature changes state law.

“It’s a business decision that our members are going to make,” said Becky Stolberg, vice president of California Beer and Beverage Distributors in Sacramento.

The governor’s overall strategy was welcomed by John Ferrari , president of Sunnyvale-based NexCycle, which had closed 50 of its 325 neighborhood recycling facilities in November because of money shortfalls. He’s uncertain how many of his centers can reopen quickly given his company’s financial struggles in recent months.

“We need to dig out of this hole first,” Ferrari said.

His sites and other retail stations — officially called “convenience-zone recycling centers” — cater to people reclaiming the five- or 10-cent deposit they paid for each bottle of water, soda and certain other beverages.

Residents typically throw the containers into their curbside recycling bins, but the recession has prompted more middle-class families to seek refunds. Higher payouts have compounded problems created by raids on the recycling account for the California Redemption Value program, better known as CRV.

Convenience-zone recycling stations collect about one-third of the 16 billion bottles and cans recycled each year in the state.

“Without convenience-zone recyclers, the entire California recycling process would be in deep trouble,” Stolberg said.

The CRV program dates to 1986, when the Legislature enacted a “bottle bill” to promote recycling. The deposit concept caught fire, and recycling rates for bottles and cans more than doubled over two decades to the current level of roughly 85 percent. Unclaimed money has supported a variety of recycling efforts, such as handling and processing fees for companies that collect recyclables.

Lawmakers have noticed the surpluses and taken money from the account to cover shortfalls elsewhere in the state budget. By July, California’s conservation officials said they would cut payments to recyclers by up to 85 percent.

The reductions hobbled businesses such as NexCycle and forced the Urban Corps of San Diego County, which trains at-risk youth for green jobs, to lay off workers.

Breakdowns in the system have generated widespread media attention and spurred a November lawsuit by recycling companies demanding that California repay its recycling loans and restore subsidies for the program. The problems also generated legislation that Schwarzenegger vetoed last year.

Now that it’s budget time again, his staff has rolled out a multifaceted plan. Besides the $54.8 million loan payment, the governor has proposed a second installment of $98.2 million in the next fiscal year, which starts July 1.

Schwarzenegger’s long-term ideas include a higher fee — one or two more cents — on glass and plastic containers that are more expensive to recycle. The provision would start in 2014.

The extra charge would fully cover the cost of recycling those materials — something the current deposit doesn’t do, said Jason Marshall , chief of recycling for the Department of Resources Recycling and Recovery.

Schwarzenegger also would give state recycling officials more authority to scale back or eliminate certain initiatives. That could include the statewide conservation corps network, which gets $20 million in funding annually.

If the governor’s long-term strategy fails to garner legislative approval, Marshall said, recycling centers that reopen this spring may have to close again in just a few months.

“We’ll be right back to where we started,” he said.

Schwarzenegger’s ideas didn’t impress Anne Bernstein, director of development for the Urban Corps of San Diego County.

Without a long-term financial commitment from the state, she said, “How do you build a program? How do you sustain it?”

The state’s recycling woes also concern Susan Collins , executive director of the nonprofit Container Recycling Institute in Culver City . She fears budget cuts will continue reducing the number of convenience-zone stations.

“Making it less convenient is not the direction I would like to see California go,” Collins said.


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