|Date Requested:February 15, 2013
Time Requested:11:25 AM
| FUND(S) |
Returnable Container Deposit Fund
Sources of Revenue
Legislation creates:A New Fund
Effect this measure will have on costs and revenues of state government.
| According to the WV Citizen's Action Group, approximately 1 billion beverage containers are used in West Virginia each year.
During the start-up phase of this program, we estimate an annual redemption rate of approximately 50% of these containers. Once the program has been established, we estimate an annual redemption of approximately 85%.
Based on the difference of the deposit amount paid initially on each container (5 cents) and the redemption amount paid on the return of the container (6 cents), if more than 83% of the containers are returned, expenses will exceed revenues during that year.
The costs associated with this proposed legislation include the cost of ensuring compliance and accountability of the vendors and redemption centers through handling income and disbursements, reports and audit procedures, and the certification and oversight of the program. Due to the number of redemption centers statewide, we anticipate this will require additional accounting and regulatory staff.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||30,741,156||51,721,156|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||50,000,000||50,000,000|
3. Explanation of above estimates (including long-range effect):
Additional staff of ten employees will be required to certify redemption centers, administer income and disbursements, monitor reporting, and ensure compliance and also deter false reporting by conducting audits on the reports submitted by the redemption centers and businesses. Based on the responsibilities outlined in the legislation, we anticipate five of these staff will be financial and five will be regulatory. Personal Services includes the mid-range salaries for five accountant/auditor II's and five environmental resources specialist I's, plus benefits. Current expenses include office space, office supplies, utilities, travel and other costs related to carrying out these duties. Assets include computers, desks, etc. and three vehicles to be shared by the staff for on-site monitoring.
The "Other" expense listed above is the estimated amount paid out to the redemption centers and businesses during that fiscal year.
The estimate is based on an antipated start date of July 1, 2014. Therefore, no expenses have been estimated during fiscal year 2013.
| The bill is designed for self depletion. The more successful this program becomes, less revenue is diverted to the State to operate the intended program and at the same time causes a significant liability for the State to the redemption centers. Based on other states' information, the processing fee paid to redemption centers is paid by the bottle distributor and not out of the deposit fee collected from consumers.
Another concern is that the bill does not address WV counties bordering other states. The redemption centers in these counties may have people from bordering states bringing in bottles to redeem deposits for which none has been paid. This will increase the State's liability to redemption centers that is not offset by the deposits that should have been collected on these containers, had they been purchased within WV.
Also, the bill does not provide a means to allow the funds transferred to the Community Litter Control Fund to be used to cover future liabilities incurred due to a higher redemption rate.
The directives of this bill are very labor intensive for the DEP to effectively oversee and operate this program.