FUNDING OPTIONS. North Carolina Office of Waste Reduction Department of Environment, Health, and Natural Resources. NCmoF

Transcription

1 North Carolina Office of Waste Reduction Department of Environment, Health, and Natural Resources FUNDING OPTIONS S DEHNR Jam- B. Hunt, Jr., Governor Jonathan B. Howes, Secretary, DEHNR Gary E. Hunt, Director, OWR NCmoF

2 I This survey was conducted by Jeff Bowyer. The report was written by Jeff Bowyer and Michael Shore. Office of Waste Reduction NC DEHNR PO Box 29569, Raleigh, NC Telephone: (800) or (919) WWW Home Page: Disclaimer Findings contained in this document do not necessarily represent policies and procedures of OWR or DEHNR. Information presented herein was provided by state governments through a survey. OWR has made every effort to ensure this document is as accurate as possible; however, errors may have resulted from improper reporting and inaccurate data entry. I' - OWR June Printed on recycled paper. 100 copies of this document were printed at a cost of $40.30 or $4.03 a copy.

3 Table of Contents 1. INTRODUCTION 2. SURVEYS RESULTS 2.1 Funding Option #1: General Fund Appropriations Funding Option #2: Waste Disposal and Collection Taxes Tipping Fee Surcharges Exchange Taxes Solid Waste Collection User Taxes Solid Waste Collection Sales Taxes 2.3 Option #3: Fees on Facility Operators Permit Application Fees Operating Fees Certification Fees Transporter Fees 2.4 Funding Option #4: Product Taxes Examples of Product Taxes Litter Taxes 2.5 Funding Option #5: "Miscellaneous" Funding Sources Oil Overcharge Funds Capital Bond Issues Sales Taxes Business Taxes Recycled Materials Tax Soft Drink Excise Tax Lottery Money Unclaimed Bottle Deposits Private Sector Donations Fines Copy Fee New York's Program 3. ANALYSIS 3.1 Ranking of State Programs 3.2 Assessment of Funding Mechanisms Disposal and collection taxes Product taxes Fees on Facility Operators 4. CONCLUSIONS

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5 1. Introduction Funding Options for State Solid Waste Programs Federal regulatory obligations combined with public concerns for the environment have challenged state governments across the U. S. to raise funds to expand their solid waste management activities but not increase demand on general fund revenues. State governments require funds to permit solid waste facilities, monitor for compliance, promote waste reduction, develop recycling markets, and help local governments and the private sector to establish recycling programs. In an attempt to gauge current levels and sources of funding in the 50 states, the North Carolina Office of Waste Reduction' conducted a national survey that asked states about their funding sources for state2 solid waste management programs. The research was conducted for the fiscal year. It is hoped that this study will fulfill two purposes: Provide states a useful resource to measure their funding levels against those of other states. Help states that are looking for additional revenue to identify alternative funding options. Section 2 of this report, Survey Results, relates direct survey results for all 50 states and describes the various funding mechanisms used across the county. The Analysis, Section 3, ranks states according to funding levels and assesses the major state funding mechanisms. 2. Surveys Results Financing data for state solid waste programs were gathered through a written questionnaire (included in Appendix A) of all 50 states for the fiscal year. In particular, the questionnaire sought information on the various funding mechanisms that each state has developed to finance state solid waste management programs and the amount of revenue gathered from each of these mechanisms. Results from the survey indicate that state funding mechanisms can be divided into five main categories: 0 Option #1: General Fund Appropriations 0 Option #2: Waste Disposal and Collection Taxes 0 Option #3: Operator Fees 0 Option #4: Product Taxes 0 Option #5: Miscellaneous Funding Mechanisms I 2 This report is national in scope. A companion report that details North Carolina funding sources is available from the NC Office of Waste Reduction. This study only explores funding for && solid waste programs; it does not include local government funding mechanisms. 1

6 General fund appropriations have been a traditional financing source for state solid waste programs. The last four categories listed above offer alternative sources of funding to help states meet the growing demand for resources to manage solid waste programs without competing for state general revenues. Figure 1 shows the percentage of total state revenues that come from each of the five funding mechanisms while Table 1 lists each states funding sources by these categories. The four main alternative funding sources can be divided into subcategories, which are listed below. This chapter describes the alternative funding sources and their subcategories of taxes and fees as revealed by the survey. Option #2: Waste Disposal and Collection Taxes Tipping Fee Surcharges Exchange Taxes Solid Waste Collection User Taxes Solid Waste Collection Sales Taxes. Option #3: Product Taxes Tires oil Products Containers White Goods & Furniture Car Batteries Newsprint Hard-to-Dispose-of Items Beer Litter Tax Option #4 Fees on Facility operators Permit Application Fees Operating Fees Certification Fees Transporter Fees Option #5 Miscellaneous Punding SOUrCeS Oil Overcharge Funds Capital Bond Issues Sales Tax Business Tax Recycled Material Tax Soft Drink Excise Tax Lottery Money Copy Fee 4 Fines Private Sector Donations Unclaimed Bottle Deposit t -_ - New York Program Sources Opti Figure 1: Summary of Funding Sources for State Solid Waste Management Programs Option#5:. Miscellaneous 21% #4: Product Taxes 24% Option #3: Operator Fees 13% Option # 1 : General Fund Appropriations 12% Option #2: Waste Disposal and Collection Taxes 30% 2

7 Table 1 : State Solid Waste Program Funding Sources, FY

8 2.7 Funding Option #7: General Fund Appropriations General fund appropriations are a conventional method of funding a wide array of state governmental activities. This funding source is widespread as 32 states utilize general revenues for solid waste activities, although they only account for 12 percent of moneys used for solid waste purposes. As demand for resources becomes increasingly competitive among state agencies, most state solid waste programs will not be able to increase financing through general fund appropriations. Other alternative funding mechanisms discussed below probably offer the best opportunities for additional solid waste funding. 2.2 Funding Option #2: Waste Disposal and Collection Taxes This group of taxes assesses charges on materials that are destined for disposal, offering a direct connection between waste generated and the costs of disposal. This study identified four different types of disposalkollection taxes: (1) tipping fee surcharges (landfill taxes); (2) exchange taxes; (3) solid waste collection user taxes; and (4) solid waste collection sales taxes. Each of these taxes are described below. Disposal and collection taxes make up the most popular and lucrative type of funding mechanism as they are levied in 29 states and account for 29 percent of total nationwide solid waste funding. Sixteen states rely on these taxes as their principal source of funding Tipping Fee Surcharges Tipping fee surcharges, also known as landfill taxes, account for the majority of waste disposal taxes. These surcharges are levied in addition to local tipping fees, which are charged to waste haulers by owners or operators of solid waste management facilities (often local governments) to cover the costs of constructing and operating the facility. These surcharges typically amount to a per ton or per cubic yard charge on waste disposed in landfills. Tipping fee surcharges are assessed to waste haulers, collected by municipal or private landfill operators, and forwarded to states every month or quarter. Tipping fee surcharges are assessed and used to fund state solid waste management activities in 26 states. Bringing in over $160 million in revenue, this mechanism contributes 24 percent of all funding sources nationwide, making it the most lucrative specific type of solid waste management funding. New Jersey generated the most revenue from surcharges at $37.7 million. California was a close second with $36.7 milli~n,~ followed by Pennsylvania at $31.2 million and Texas at $26.5 million. The average revenue generated from these taxes is about $4.4 million. Major differences characterize tipping fee surcharges among the states: -- 3 The California figure is for the fiscal year. 4

9 0 Tipping fee surcharges targeting specific wastes: Surcharges most often apply to all solid waste disposed at a specific type of solid waste facility. However, taxes are also charged to "special wastes" such as tires, white goods, or asbestos that are particularly hard to dispose. Arizona and Maine are the only states that reported charging taxes only on "special wastes. 'I In addition, two states, Montana and Oklahoma, reported charging taxes only on out-of-state waste transported into the state for disposal. A few states, such as Nevada and New Hampshire, recently repealed such taxes. In these states, out-of-state landfill taxes were found unconstitutional under the Interstate Commerce Clause. 0 Tipping fee surcharges targeting specific facilities: Many states apply the tipping fee surcharge only to waste disposed in municipal solid waste landfills. However, a few states impose the surcharge on one or more other facilities in addition to municipal solid waste landfills, including construction and demolition landfills, incinerators, transfer stations, and burners. Connecticut charges the tax only to resource recovery facilities, and Utah includes only commercial disposal facilities. Minnesota, the only state to impose the tax on facilities in a specific region, has a $2 per ton surcharge only on disposal facilities within the Twin Cities Metropolitan Area. Differences in amount and structure of tipping fee surcharges: Tipping fee surcharges are most commonly charged by the ton, with taxes generally ranging from 50 cents to $2 per ton. While the mean average surcharge is about $1 SO, some states, such as New Jersey and West Virginia, charge more than one tipping fee surcharge per facility. New Jersey charges a total of five different taxes that amount to $8 per ton at landfills. These different taxes are used to fund different state solid waste management programs. Only four states, Colorado, Minnesota, Nebraska, and Texas, assess a surcharge on a per-volume basis. Nebraska and Texas offer both a per-ton and an alternative percubic-yard fee, depending on the method of measurement at the facility. In addition, for wastes measured by volume, both states allow a different surcharge for compacted and uncompacted solid waste. Texas charges 40 cents per cubic yard for compacted solid waste and 25 cents per cubic yard for uncompacted solid waste, while Nebraska charges 42 cents and 21 cents, respectively. Most states charge the same per unit fee for solid waste disposed or processed under all circumstances. Some states, such as Missouri and Wisconsin, use a rate that varies with the type of disposal facility or type of waste disposed Exchange Taxes Exchange taxes are charged to owners of specific products, such as tires, when they bring the product to an authorized retail establishment such as a garage or automotive store. The retail establishment -- must then arrange for the proper disposal of the product and remits the revenue, minus specified administrative costs, to the state. Exchange taxes are present in only two states, California and Celorado, each of which assesses a charge for tire disposal. California has a 5

10 "Tire Recycling Management Fee," which assesses a disposal tax of 25 cents per tire to each person who leaves tires for disposal with a tire retailer Solid Waste Collection User Taxes Solid waste collection user taxes are charged to businesses or residences either on a flat monthly rate or on a volume- or weight-based rate to pay for the costs of collection and disposal. These taxes are used in three states, North Dakota, Oklahoma, and Minnesota. Oklahoma imposes a tax of 25 cents per month or $3 per year for customers of solid waste services operated by or on behalf of a political subdivision or public trust. The tax is included in the normal billing cycle and is remitted by the political subdivision or public trust to the state for administration of the Oklahoma Solid Waste Management Act Solid Waste Collection Sales Taxes Solid waste collection sales taxes are assessed on solid waste collection services. While frequently used for solid waste management purposes, these taxes can be remitted to the state for othkr purposes as the legislature sees fit. These taxes are only used in Minnesota and Washington. Minnesota has a SCORE tax, which is an excise tax of 6.5% imposed on gross receipts from all retail sales for solid waste collection and disposal services. Washington assesses a 1 % tax on solid waste collection services that varies with collection service levels, but that tax was scheduled to sunset on July 1, Table 2: State Use of Waste Disposal and Collection Taxes, FY Tipping fee surcharge 26 36* $163,3 12,828 $4,536,467 Exchange tax 2 2 $ 4,270,233 $2,135,117 Collection user tax 3 3 $ 6,950,000 $2,316,667 Collection sales tax * Arkansas has two different tipping fee surcharges, Arizona two, Indiana two, New Jersey five, and West Virginia four ** Washington has two different collection taxes 6

11 2.3 Option #3: Fees on Facility Operators The number of fees that can be levied against solid waste disposers, processors and transporters can be characterized into four groups: (1) permit application fees, (2) operating fees, (3) certification fees, and (4) transporter fees. These fees establish direct links between the demand for services and the cost of providing them. Operators are required to remit the fees to the state usually on a quarterly or semi-annual basis. These fees are used in 29 states but do not generate nearly as much revenue as product taxes or waste disposal and collection taxes. Only California, Illinois, and Montana rely on them for their principal funding mechanism. Each of the four types of fees is described below Permit Application Fees Permit application fees are charged to facility operators for processing costs associated with the initial permitting of a facility or for modifications to a facility. The amount of the fee is often based on the type and size of the facility, and the revenue from these fees often covers the sert-up costs associated with the permit application process. These fees, collected in 17 states, are the second most common type of facility operator fee, the first being operating fees, discussed below. They usually amount to a one-time fee ranging from several hundred to several thousand dollars depending on the type and size of the permitted facility. For example, in a relatively simple system, Missouri charges $5,000 for recycling processing plants, $10,000 per permit for landfills, and $12,000 for tire transfer stations while Kentucky has a one-time fee ranging from $500 to $10,000 depending on the size and type of the facility. Oregon has a system for determining the amount of the fee based on the anticipated costs of permitting and inspecting the particular site. Alternatively, Colorado bases the fee on actual costs; it assesses a fee of $72.47 per hour on the review of new facility applications and modification applications. Some states, such as Arkansas and Colorado, assess an application fee for both new facilities and modifications, while most states only charge the fee for new facilities. Louisiana assesses the fee for applications, modifications, facility closure, and transportation notification. Wisconsin has a facility plan review fee for reviewing on-site evaluations and plans Operating Fees Operating fees are charged to solid waste facility operators usually on an annual basis for the privilege of operating an environmental facility and to cover certain annual costs to the state. In addition, these fees often start with an initial application fee. Operating fees, which are used in 19 states, are the most common.and lucrative fee on facility operators. The main advantage of this fee over an application fee is that the revenue is not tied to the number of permits issued in a year. Therefore, revenue from this source is more significant and consistent from year to year; the average state revenues from operating fees are about $3.8 million, while the average revenues from application fees are only about $200,000. 7

12 Most states that use this fee charge it to all types of solid waste facilities and base the amount of the fee on the type of facility, its size, and/or the volume waste processed/disposed at the facility. Indiana, for instance, charges a number of different operating fees, including those for solid waste landfills (from $2,000 to $35,000); construction and demolition sites ($1,500); restricted waste sites (from $10,000 to $35,000); processing facilities ($2,000); and incinerators (from $2,000 to $35,000). A couple of states, such as California and Illinois, charge these fees only to landfill operators according to the amount of waste disposed at the facility. Indiana and Michigan also have registration fees for storers of scrap tires, with annual fees of $500 and $200, respectively. New Jersey has an annual registration fee of $6,400 for "non-traditional" recycling facilities, which include those that handle such materials as concrete, asphalt, and rubber tires, and this revenue is used for permitting, compliance, and record keeping Certification Fees Some states charged certification fees to facility operators or waste haulers when they are licensed to handle solid waste. The revenue is usually used to pay for operator certification or training programs. These fees are used in only five states -- Arkansas, Indiana, Kentucky, Loihiana, and New Hampshire. Because of the small number of facility operators, these fees do not raise significant revenue but usually serve to cover the costs of operator certification or training programs. These fees usually range from $40 to $50 and raise on the average of $37,000 a year for state solid waste management programs Transporter Fees Assessing fees to transporters are most often associated with hazardous materials haulers, but some states also levy a tax on the transport of solid waste. These fees, the least common type of operator fee, are present in only three states. Delaware chkges a $300 fee on all solid waste transporter permits, Tennessee has a municipal solid waste hauling fee of $50, and New Jersey also has a solid waste transporter fee. Table 4: State Use of Facility Operator Fees, FY Permit Application 17 18" $3,837,197 $ 213,178 Operating 19 22** $83,024,368 $3,773,835 Transporter 3 3 $4,418,000 $1,472,667 Total I 30 I 46 I $91,464,565 I $1,988,360 * Tennessee has two permit application fees. ** California, Indiana, and Nebraska have two operating fees. 8

13 2.4 Funding Option #4: Product Taxes Product taxes, sometimes known as advanced disposal fees (ADFs), seek to attach a tax on products and packages commensurate with their impact on the solid waste disposal system. The tax is usually charged at the retail level on a per-item basis on products that are difficult to dispose of, comprise a significant portion of the waste stream, and/or are difficult to recycle efficiently. Product taxes can provide the following: (1) advance funding to help offset the costs of disposing or recycling waste created by using a product; (2) general revenue for solid waste management programs; and/or (3) an incentive to the public for waste reduction and recycling by requiring consumers pay for waste disposal costs. Such products include tires, white goods, and beverage containers. Because of the ubiquitous nature of some of the products taxed, this mechanism can be a significant generator of revenue. Product taxes are used in 32 states and make up about 24 percent of the total solid waste management funding. Twelve states rely on product taxes as their principal source of funding. Product taxes can either take the form of single-item taxes or general litter taxes. There are a number of ways to administer a product tax. One alternative is to tax at the manufacturing level, where the raw materials are taxed before they are formed into a product, or to tax the manufacturer on the value, weight, or quantity of packaging the product. The cost is eventually passed onto the consumer, but the manufacturer may also find it makes economic sense to reduce its consumption of packaging material, thereby reducing its input costs and decreasing the amount of solid waste generated. The most common point of collection, however, is at the retail level. Taxation at the point of sale provides a greater possibility for influencing positive consumer behavior through imposition of the tax. The tax can be set up so that exemptions to the tax can be introduced at the retail level if certain recycling or waste reduction goals are met by the manufacturer of the product. Therefore, if the tax is visible to consumers, it can influence consumer decisions and force manufacturers to recycle or use recycled materials in their products. Because product fees and taxes are used differently from product to product, each type of product is discussed separately below Examples of Product Taxes Following are descriptions of taxes on specific items: 0 Tires - By far the most commonly taxed single item is tires, with 28 states having some form of this tax. Making up 15 percent of state solid waste management funding nationwide, these taxes are the second-most lucrative specific funding mechanism behind tipping fee surcharges. The revenue from tire taxes, unlike the revenue from tipping fee surcharges, however, is used predominately for one specific purpose. They are mainly used to subsidize 9

14 I the management of used tires, including cleaning up waste tire piles, promoting alternative methods of using old tires, and developing markets for tire-recycled products. Therefore, tire taxes, while valuable for these purposes, do not usually provide funding for general solid waste management activities, such as general recycling, permitting, and enforcement. Tire fees range from $.25 per tire in Indiana to $2.60 per tire in Texas. Eleven states charge $1.00 per tire. Tire taxes are either collected at (1) the wholesale or retail level or (2) vehicle registration or title transfer. Most taxes are collected at the retail level and are only collected once in the life of the tire. In contrast, a tax imposed at registration or title transfer may provide an ongoing source of revenue over the life of the tire. Minnesota, Illinois and Michigan are the only states identified that impose the fee at title transfer, with taxes of $4.00, $SO and $SO respectively. Although this method does not cover the sale of new tires, the fee can be collected more than once for each tire. The result in Minnesota is the capture of a higher per capita revenue than other states. Wisconsin ($8.00 per vehicle) and South Dakota ($1.00 per vehicle) assess a tax at vehicle registration. Because these states fail to tax replacement tires, these taxes raise a lower per capita revenue than taxes levied at vehicle transfer. Ohio is the only state to charge the fee on the wholesale level and North.Carolina and Texas are the only states that reported charging a higher fee for truck tires. Oil products - A far distant second in popularity are taxes on oil products which are used by five states. Three states charge this tax on the purchase of oil products. Both Texas and Tennessee charge $.02 per quart on oil at retail and South Carolina charges $.08 per gallon on motor oil and similar lubricants. Using different methods, Hawaii assesses a tax of $.05 per barrel on all imported petroleum and California requires every oil manufacturer to pay $.04 for every quart of lubricating oil sold or transferred in the state or imported into the state. All of these states use the revenue from this tax for used oil collection programs. Containers - Another category of product taxes includes beverage containers and other packaging material. Because of the ubiquitousness of containers, this mechanism can generate a significant amount of revenue. In addition, this tax has significant potential to influence waste reduction and recycling habits among consumers. Despite these benefits, only three states currently have taxes on beverage containers, possibly because of the high administrative costs and the complexity associated with this mechanism. The most notable of these states is Florida, which instituted a tax of a penny per container for cans, bottles, jars, and beverage containers from five ounces to one gallon made from aluminum, glass, plastic, plastic-coated paper, or metal, which have not achieved recycling rates greater than 50 percent in Florida. In addition, a company can exempt their containers from the tax through one of two ways: (1) meeting specified recycledcontent goals for their containers; (2) or meeting "takeback" provisions for their containers. Hawaii has an advance disposal fee of $.015 only on glass containers and, unlike Florida, did not establish any exemptions to the tax or place a size limit on containers. Therefore, the fee is assessed equally on everything from vials of insulin and nail polish containers to large apple cider jugs. Like Florida, the tax in Hawaii is collected at the retail level and remitted to the state. 10

15 Rhode Island, using a much simpler system, charges $.04 on every case (24-pack) of carbonated beverages. White goods and furniture - Only three states, Maine, South Carolina and North Carolina, charge a tax on furniture or "white goods" which include refrigerators, stoves, washers and dryers, and other similar appliances. Similar to tire taxes, this tax is substantiated by the disposal difficulties of large appliances. All three states charge this tax at the retail level. Maine charges $5.00 per item, South Carolina charges $2.00, and North Carolina charges $10 for appliances with chlorofluorocarbons (CFCs) and $5 for appliances without CFCs. In Maine the tax also applies to furniture, mattresses and bathtubs. Car batteries - Three states charge a tax on car batteries: South Carolina, Maine and Rhode Island. South Carolina assesses a $2.00 tax on lead-acid batteries at the retail level and Rhode Island has a "Vehicle Battery Deposit and Control" program. This program involves collecting a $5.00 battery deposit at retail, which the consumer can reclaim upon returning the used battery at a retail outlet. Newsprint - The basis for taxes on newsprint is not generally to raise significant revenues, but to influence the actions of manufacturers and publishers. For instance, a tax on newspapers levied against printers who use nonrecycled paper will encourage the use of recycled paper, thus increasing the recycling market for this material. Only two states, North Carolina and Florida, reported assessing a tax on newsprint. Both states offer the exception that if a certain percentage of newsprint is recycled, the manufacturer does have to pay the tax. Because of this exception, North Carolina and Florida receive only small amounts of revenue from the tax. 0 Hard-to-dispose-of items - Rhode Island has a tax on various items that are difficult and/or costly to dispose. These items includes oil products, tires, and glycol-based antifreeze. Beer - Virginia has a tax on beer and malt beverages. It is levied on the brewery, bottler, or wholesaler who sells to the retailer. The rates are $.15 per barrel, $.05 per bottle up to twelve ounces, and $.02 per ounce for bottles over twelve ounces Litter Taxes Litter taxes apply to a wide variety of products, such as groceries and pharmaceuticals. This tax, which is not commonly used, is a percentage or certain amount of tax per million dollars of sales of litter-generating products at the wholesale or retail level. Because of their broader scope, litter taxes are not as visible as single-item taxes and thus do not offer the advantage of influencing consumer decisions. Five states have enacted some sort of litter tax. -- New Jersey has a "Clean Community Tax," which is a tax on fifteen categories of littergenerating products, generating $300 per million of sales at the wholesale level and $225 per million of sales at the retail level. Nebraska charges $175 per million of gross proceeds of 11

16 ~ Product ~ Oil ' ~~ products manufactured, wholesaled, and sold in the state except for agricultural products. Washington has a similar tax. Virginia has a flat tax rate of $10 on business establishments that sell certain litter-producing items and an additional $25 on establishments that sell beer, malt beverages, soft drinks, or groceries. Rhode Island has a unique litter control permit system, which charges a permit fee on fast-food takeout establishments based on their gross receipts. Table 3: State Use of Product Taxes, FY Products Containers White Goods Car Batteries Newsprint 5 1 $ 20,884,658 I $ 4,176,931 3 I $ 20,134,000 I $ 6,711,333 3 I $ 5,492,603 I $ 1,830,868 3 I $ 1,780,790 I $ 449,097 2 I $ 160,000 I $ 80,000 Hard-to-Dispose Beer Litter TOTAL 1 $ 1,100,000 $ 1,100,000 1 $ 731,806 $ 731,806 6 $ 12,679,528 $ 2,113, $165,283,701 $ 5,165, Funding Option #5: "Miscellaneous" Funding Sources Some fees, taxes, or other funding sources do not fit into any neat category. "Miscellaneous" mechanisms are used in 24 states and make up 21 percent of the national funding. Half of these states rely on one or more of these mechanisms as their principal source of funding Oil Overcharge Funds Oil Overcharge Settlement Funds are the result of the settlement of a civil suit brought against several large oil companies by United States Department of Energy for overcharging consumers for oil during the 1970's, when the price of oil was regulated. Many states were allowed to use this money for projects that result in energy savings. Because these funds are running out, this money will likely cease to become a source of revenue for any state in the next couple years. Most states have already spent these funds, but six states -- Colorado, South Carolina, Georgia, Mississippi, Rhode Island, and Alabama -- have managed to save these funds 12

17 I for specific purposes. Of these states, South Carolina expended the most money out for solid waste activities of the fund with $1,138, Capital Bond Issues Six states have opted for capital bond issues to temporarily fbnd their solid waste management programs. These states are Connecticut, Georgia, Michigan, Massachusetts, Wisconsin, and Vermont. While not a steady source of revenue, bonds offer each of these states its principal source of funding. In 1989, Michigan issued $660 million worth of voter-approved general obligation bonds to fund its "Environmental Protection Bond Fund." This fund is used to finance a number of different environmental programs, including a total of $150 million for solid waste management. About $20,500,000 was allocated to fund grants and loans to the public and private sector. The amount of bond funds allocated each year for solid waste management depends upon the number of grant applications received each year Sales Taxes While a trend in funding is to tie the source of solid waste revenue to a specific product, two states have managed to use part of their govemed sales tax revenue to fund their solid waste mkgement programs. Florida allocates.2 percent of its general sales taxes for solid waste management, amounting to $20 million. New Mexico enacted an "Environmental Gross Receipts Tax" in 1991, which authorizes local governments to set aside money for state solid waste management purposes. This allocation is 1/8 of 1 percent for municipalities and 1/16 of 1 percent for counties, raising about $3.5 million in fiscal year Business Taxes Three states, Nebraska, Ohio, and New Jersey, assess taxes on corporations or retailers. Nebraska charges $25 per year on retail businesses with sales of $30,000 or more. The approximately $2,000,000 in revenue generated was used to fund grants and the waste management program. Ohio has a corporate franchise tax, which assesses a tax on corporations based on the value of their issued and outstanding shares of stock. New Jersey has a tax on the gross revenue of certain solid waste operations. This tax, which generated over $3.5 million, cannot exceed.0025 percent of the company's revenue Recycled Materials Tax Ohio requires that part of the revenue from the sale of recyclable materials be remitted to the state primarily to fund promotional and educational recycling programs. This results in about $50,000 in revenue per year Soft Drink Excise Tax Virginia assesses an excise tax on soft drinks on every wholesaler and distributor of carbonated soft drinks which raised $163,312 for solid waste management programs

18 I Lottery Money Louisiana and Nebraska allocate part of the revenues from their state lotteries for solid waste management purposes. Nebraska allots $3,500,000, which is 25 percent of the total lottery revenue, for a landfill closure assistance fund. Louisiana allots $4,000,OOO Unclaimed Bottle Deposits The predecessor of the container ADF is the bottle deposit, which promotes recycling by offering consumers a refund when they return glass bottles. Both Massachusetts and Maine use unclaimed bottle deposits to fund their solid waste management programs Private Sector Donations North Carolina is the only state that reported revenue from private sector donations. Three companies contributed a total of $54,000 to its Solid Waste Management Trust Fund Fines. Six states reported collecting money from penalties and fines. These states are Florida, New Jersey, Pennsylvania, Rhode Island, Tennessee, and West Virginia. Of these states, New Jersey used the most for solid waste management purposes at about $700, Copy Fee Louisiana assesses a fee on invoices for copy machine copies and computer printouts which generated approximately $24, New York's Program New York has unique system of funding mechanisms which warrants creating a separate category especially for them. The state combined four different mechanisms to provide $13 million for solid waste management. This money was used to fund three grant programs to the counties for landfill closure, recycling, and market development activities. The first mechanism is revenue from the sale of surplus state lands. The second is proceeds from the sales, leases, or easements of underwater lands in the state. The third is the sale and renewal of special conservation license plates. The fourth is interest that was saved when the state refinanced their public debt when interest rates were down. The revenue from this last mechanism will soon run out and may be replaced by a portion of the revenue from the state's real estate transfer tax. 14

19 ~~ Table 6: State Use of Miscellaneous Funding Mechanisms FY Type of Fee States with Revenue Average Revenue Fee Generated * 1 Oil Overcharge Funds I 6 I $ 2,886,552 81,092 I Capital Bond Issues I 6 I $ 77,948,514 $ 12,991,419 1 Sales Tax 2 $ 23,544,071 Business Tax 3 $ 15,555,280 5,185,093 Recycled Materials Tax 1 $ 50,000 $ 50,000 I Soft Drink Excise Tax 1 $ 163,312 $ 163,312 I I Lottery Money I 2 I $ 7,500,000 $ 3,750,000 I I Unclaimed Bottle Deposits I 2 I $ 2,750,000 1 Private Sector Donations I 1 54,000 I Fines I 6 1 $ 1,166,747 1 Copy Fee I 1 24,000 1"NewKrks Taxes" I 1 I $ 13,000, TOTAL I 33 I $ 144,642,476 I + 194,45 1,375,000 kl 8 $ 13,000,000 I $ 4,383,105 I I 15

20 3. Analysis 3.1 Ranking of State Programs The survey results revealed the states greatly vary on the amount of funding available for solid waste management purposes. Table 6 lists total funding levels for each state solid waste program as well as ranks of state solid waste funding levels according to per capita spending and per ton solid waste funding. Highlights from this table are as follows: Total State Solid Waste Program Funding, FY Average State Funding: $14,000,000 / year Standard Deviation: $19,000,000 Most Fund Raised: $72,000,000 / year (California) Least Funds Raised: $315,000 / year (Wyoming) Note that the average funding rate is inflated by the highest-funded states of California, Niw Jersey, Texas, Florida, Minnesota, Pennsylvania, and Wisconsin, all of which exceed $45 million in solid waste management funding levels. As state population and funding amounts are directly correlated, more accurate indicators of state funding levels for solid waste management are: (1) dollars spent per capita and (2) dollars spent per tons of waste managed. Figure 2 shows the per capita ranking in terms of solid waste funding for all fifty states. Following are the Table 6 highlights for these indicators: State Per Capital Solid Waste Funding, FY Average Per Capita Funding: $2.80 / person / year Standard Deviation: $2.84 High: $12.97 / person / year (Vermont) Low: $.27 / person / year (Utah) State Funding Per Ton of Waste Managed, FY Average Funding Per Ton of Waste Managed: $2.95 / ton of solid waste / year Standard Deviation: $3.52 High: $16.61 / ton of solid waste / year (Vermont) Low: $.27 / ton of solid waste / year (Utah and Nevada) I Note that the rankings indicated in Table 6 do not take into account any economies-of-scale that larger states may achieve as they develop solid waste programs. Also, states are ranked according to revenues generated which does not reflect where funds are spent

21 North Carolina Population ,187, ,000 3,936,000 2,424,000 31,211,000 3,566,000 3,277, ,000 13,679,000 6,917,000 1,172,000 1,099, ,697,000 5,713,000 2,814,000 2,531,000 3,789,000 4,295,000 1,239,000 4,965,000 6,012,000 9,478,000 4,s 17,000 2,643,000 5,234, ,000 1,607,000 1,389,000 1,125,000 7,879,000 1,616,000 18,197,000 6,945, ,000 11,091,000 3,231,000 3,032,000 12,048,000 1,000,000 3,643, ,000 5,099,000 18,031,000 1,860, ,000 6,491,000 5,255,000 1,820,000 5,038, Solid Waste Total Solid Waste Per Capita State Per Ton Solid State Generated Program Funding Solid Waste Rank Waste Funding Rank (tons / year) 6 1 year) Funding ($ /ton /year) (%/ person / year) 4,000, ,OOO 0.4 I ,000 2,000, ,869,O 18 8,094, ,097,085 8,915, ,000,000 72,390, NA 2,222, NA NA 3,128,736 10,819, ,325, , ,499,070 55,254, ,372,198 11,576, ,000,000 4,276, ,000 1,404, ,800,000 13,800, ,428,252 8,040, ,187,859 7,000, ,282,325 6,187, I ,800,000 3,417, ,186,158 11,038, ,100,000 4,650, ,400,000 5,907, NA 5,000, NA NA 10,725,000 2S,610, ,956,035 49,377, ,900,000 4,738, ,547,589 9,538, , , ,632,605 8,461, ,400, , , , ,054,054 63,179, ,664,630 3,544, ,300,000 25,400, I ,240,462 10,062, I , , I ,502,000 16,623, ,237,000 3,828, ,490,696 4,193, ,900,000 47,285, ,000 6,139, ,044,000 7,436, ,200 1,527, ,000,000 9,754, NA 57,651, NA NA 2,759, , so ,000 7,472, , ,315, oo 38 5,683,721 12,508, I5 1,972,624 13,735, ,844,253 45,600, NA 17

22 Figure 2: Per Capita Solid Waste Management Funding Minnesota Wisconsin New Jersey West Virginia Rhode Island Nebraska Florida Pennsylvania Maine Arkansas Hawaii Alaska Connecticut Texas Michigan Louisiana Iowa. Kansas Washington California New Mexico t a t e S South Dakota Arizona South Carolina Tennessee Missouri Mississippi Georgia Ohio North Dakota North Carolina Indiana New York Oregon Idaho Maryland Oklahoma Illinois Delaware Kentucky Massachusetts New Hampshire Montana Wyoming Virginia Colorado Alabama Nevada Utah Per Capita Funding ($), FY 93-94

23 ~~ ~- The survey results in combination with results from a previous New York4 study, indicate that general fund appropriations are gradually accounting for a smaller and smaller proportion of overall solid waste management funding. As shown in Figure 3, general fund appropriations provided most (defined as over 50%) of the total state solid waste management funding in 50 percent (24 of the 48 states surveyed) of the states in FY By FY 93-94, this number decreased to 14 percent (7 of the 50 states surveyed). In FY 93-94, general appropriations accounted for about 12 percent of the total nationwide solid waste management funding and were used to some extent in 32 states. ~ ~~~~ ~ ~ ~~~~- - Figure 3: States Use of General Fund Appropriations ~. 10OYo 9 0 Yo 80% 70% 6 0 Yo 5 0 Yo 4 0 Yo 3 0% 20% 10% 0 Yo "one Partially, <5 0% C3M ostly, >50% -All 3.2 Assessment of Funding Mechanisms Following is a brief assessment of the three major alternative categories of solid waste funding identified by the survey (the miscellaneous category is not discussed here): Disposal and collection taxes Solid waste collection and disposal taxes are effective funding mechanisms in many states. If correctly designed and carefully implemented, they can provide the double advantage of raising significant revenues and encouraging waste reduction and recycling. They are also *- 4 Survev of State Fundin? for Solid Waste Mwment Proyrm, New York Department of Environmental Conservation, Division of Solid Waste, November,

24 among the easiest to implement solid waste management funding mechanism available to states. Solid waste collection sales taxes, with an average revenue of over $9 million per mechanism, offer perhaps the greatest revenue potential. For example, Minnesota generated over $20 million in from its sales tax on collection and disposal services. Tipping fee surcharges also offer significant revenue potential, as evidenced by New Jersey's surcharge, which raised over $37 million in The amount of a landfill tax (Le. the charge per ton of solid waste disposed) can be set by determining the solid waste management funding needs of the state and setting the tax at a level that will achieve these needs. Solid waste disposal taxes are relatively easy to apply. The costs of collection is relatively low due to the small number of collection sites that can be easily identified and monitored, and the taxes are collected on an easily quantifiable product. In the case of tipping fee surcharges, the taxes are already collected through the existence of landfill tipping fees in every state. These taxes also tend to be politically acceptable, perhaps because they are easily justifiable and present a direct connection between the waste generated and the costs of disposal. Solid waste collection taxes, especially collection user taxes, are likely more complicated to administer because of the greater number of collection sites Product taxes Generally, product taxes can provide significant revenue but are often difficult and costly to administer. Depending on the type of product, these taxes may require that a new collection mechanism or accounting system be established, which may be costly for government and a financial and logistical burden for business. For this reason, this mechanism is best applied to high volume products with few collection points. Product taxes on containers (e.g. cans, bottles) are much different than other types of product taxes, such as those on tires and white goods. Because of the ubiquitousness of the products, taxes on containers have the potential to generate great amounts of revenue. Container taxes in both Hawaii and Florida fund a good portion of the states' solid waste management programs, including recycling and waste reduction grants. However, container taxes also present numerous problems. For one, they affect numerous vendors, including every gas station, grocery store, drug store, department store, and anywhere else selling products in containers subject to the fee. For this reason, these taxes may be diffcult and costly to administer. Consequently, they may also meet with stiff opposition from retail establishments and container manufacturers. Products like major appliances, tires, oil, and batteries are attractive for solid waste taxes. This group of products present certain disposal problems. They represent large amounts of solid waste, are difficult to recycle, and often require special handling. In addition, adm)nistering taxes on these types of products is relatively simple since the taxable items are easily defined and the dealers are easy to identify. Furthermore, there are not an inordinate number of taxpayers, which makes it administratively feasible for collection at the retail level. 20

25 Also, the cost of collecting the tax may be negligible since other taxes or fees are collected at the same time as the tire fee. Tire and oil taxes, in particular, can generate significant revenue and are most commonly used to target the specific waste disposal problems of waste tires and used oil. Other products, such as batteries and white goods, may not generate as much revenue as tire taxes, but they can generate enough revenue to cover the costs of programs that address the specific disposal, problems of the product. In general, the effectiveness of product taxes is determined by the structure of the tax; These taxes may be the most complicated funding mechanism described in this study Fees on Facility Operators Since fees charged to facility operators are targeted to a particular service or group, they have a narrower revenue base than other funding sources. Therefore, fees by themselves usually do not provide sufficient revenue to fund solid waste management programs. In addition, application fees do not provide a steady source of income, since revenue from the fees depends upon the number of facilities that receive permit applications in a year. However, with the increasing privatization of solid waste management facilities, operating fees can provide a useful revenue source for states to monitor these facilities for compliance. 4. Conclusions States are less and less likely to fund solid waste activities with general appropriations, and therefore, state solid waste management programs must seek funding elsewhere. This study has revealed that states have been very creative in the number of different solid waste funding mechanisms that they have developed. To identify an appropriate mechanism, state government officials must consider the advantages and limitations of particular funding sources. For example, some sources can generate significant revenue but may be difficult and costly to administer, and some sources can encourage detrimental waste management or recycling practices. Whatever the choice, states must consider their long-term needs so that they can provide solid waste management programs with a steady and sufficient level of funding. It is hoped that this study will provide state governments with an array of options as they attempt to finance their solid waste management activities. 21

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