Container deposit systems can be a powerful way to incentivize the return of containers, whether for reusable packaging systems in B2B or consumer applications or for recycling. However, the process requires oversight – particularly when hundreds of millions of dollars are involved. In California, consumer advocacy group Consumer Watchdog says that something is wrong with the state’s bookkeeping. The group has called upon the Senate and Assembly budget chairs to investigate the Department of Finance’s understatement of available funds in CalRecycle’s budget as a way to free money up to borrow and to stop legislatively authorized spending on bottle bill reform.
“There is a pattern of the Department of Finance grossly understating the fund balance so that CalRecyle cannot spend legislative-appropriated funds. That allows DOF to more freely borrow against the fund.”
“The integrity of the state budget is critical for the functioning of the government,” Consumer Watchdog wrote two lawmakers today. “We write to point out a $300 million understatement in the size of CalRecycle’s Beverage Container Recycling Fund (BCRF) reflected in the Governor’s budget this month.”
“The current balance in the BCRF fund is reported in the Governor’s Budget as $538 million for fiscal year 2022/23. The fund in that fiscal year contained $830 million, according to financial statements submitted by CalRecycle to the Department of Finance (DOF). That leaves a discrepancy of nearly $300 million.
“This critical mistake has grave implications for CalRecycle by making it appear that it has $300 million less funds to spend on reform of our broken bottle deposit system as prescribed by SB 1013. The misrepresentation is not a mere mistake. There is a pattern of the Department of Finance grossly understating the fund balance so that CalRecyle cannot spend legislative-appropriated funds. That allows DOF to more freely borrow against the fund.”
Consumer Watchdog pointed to previous reporting by the San Francisco Chronicle on the issue.
The letter goes on to say, “This cynical game that permits the DOF’s borrowing has gone on for too long, but this year it comes with extreme consequences of the system not being ready for new rules taking effect in 2025.”
Consumer Watchdog’s letter points out that previous governors’ budgets allocated more than $146 million in CalRecycle grant money to grocery store chains and recycling centers to install consumer-friendly automated deposit refund technology in advance of a major redesign of the system under SB 1013. The understatement of available funds makes it look like there is less money to dispense in grants. CalRecycle has committed to just $40 million in grants and could be discouraged from granting the remaining $106 million appropriated by the legislature due to the misstatement.
“We urge you to verify what monies are in fact available to spend to provide consumers with convenient redemption options beginning on January 1 next year and to untie CalRecycle’s hands so that it can award $146 million in grants and fulfill its other obligations under SB 1013,” the letter concludes.
Bottle Deposit Systems Best Practices
When you look at container deposit system best practices, Tomra, the reverse vending machine vendor for empty consumer beverage containers, identified four keys to having a superior deposit system in a 2021 article, and they remain valid today. Those keys include:
- Performance: A collection target for all beverage containers plus a meaningful deposit delivers strong results.
- Convenience: The redemption system is easy, accessible, and fair for all users.
- Producer Responsibility: Producers finance and invest in the system using unredeemed deposits, commodity revenues, and an eco-modulated EPR fee.
- System Integrity: Trust is built into the system’s processes through transparent management, a data-driven clearinghouse, and reliable redemption technology.
According to Consumer Watchdog, California is falling short regarding system integrity, which is impacting convenience due to a lack of investment. In turn, this is impacting bottle return performance. We will continue to follow this story.
More on the California Bottle Deposit System
The Good, The Bad, And The Ugly Of California Bottle Deposit Reform Legislation
Fraud In Bottle Deposit System Out Of Control
Bill To Save California’s Collapsing Bottle Deposit System Passes First Legislative Hurdle
Rick LeBlanc, EMBA, is the founder and editor of Reusable Packaging News (subscribe to the free newsletter) and editor of Western Pallet Magazine. A supply chain journalist with more than 30 years of experience, he specializes in pallets, reusable packaging, material handling and related operations. Rick is co-author of Pallets: A North American Perspective and Pallets & Progress: A Collected History of Pallets and Palletized Handling 1922–1945. He is also an advisory board member of the Virginia Tech Center for Packaging and Unit Load Design. Read Rick’s full bio.
