CEA Opposes Transfer of Money from California E-Waste Account

CEA is opposing a move by the California government to loan $75 million from the Electronic Waste Recovery and Recycling Account (EWRRA) to the general fund. The money from the e-waste account comes from a fee levied on consumers who purchase electronic gear and is used for the state’s electronics recycling program. Citing a substantial reserve in the e-waste fund and projections that revenue is “running ahead of expenditure demands,” CalRecycle staff recommended cuts to the recycling fee on consumers.

The state’s e-waste fund has grown from $31 million in fiscal 2004 to $108 million in fiscal 2008. Governor Arnold Schwarzenegger’s (R) budget for fiscal 2010 projects a reserve balance of $138 million in the fund and proposes a two-year loan of $75 million to the general fund. In letters to Schwarzenegger and state lawmakers, CEA voiced concern that the transfer of $75 million from the e-waste recycling account will “deplete the funds and undercut the operational success achieved by this program as consumers continue to recycle used electronics in unprecedented amounts."

CEA also objects to the “principle of an exclusive tax on consumer electronics to support general fund programs,” wrote Walter Alcorn, vice president of environmental affairs. “Although still structured as a fee, raiding the EWRRA to cover general government expenses would make the electronics advance recycling fee look and feel like a general tax on a specific class of products,” he said. A taxation system that favors one class of products with lower taxes over others “without any rational basis is unfair, and possibly illegal,” Alcorn said.

Asked if he saw the advanced recycling fee model vulnerable to government raids, Alcorn told us that the problem isn’t “unique to the ARF model.” Whenever the government is “taxing our products or manufacturers for a particular purpose there is the danger and the temptation for the government to use the money for other purposes,” he said. “It is something we have to be vigilant about."

As for the cuts proposed in the electronics recycling fee, he said CEA wants the fees to be lowered to “no more than they need to be to support the program.” The group is “pulling together” projections of product sales to help the state set an “appropriate fee level,” he said. One assumption that CalRecycle is making in proposing fee reductions is that the annual sales of covered electronic products will remain flat at 9.5 million units a year.