The state Department of Health has indicated its intent to raise the deposit beverage container handling fee from 1 cent to 1½ cents in the fall of this year. This fee is in addition to the 5 cent deposit, which is fixed by law.

So, who takes the hit?

At the top of the list are Hawaii’s consumers. Prices for beverages falling under this regulation — including juices, waters, sports drinks, sodas and beer — will increase. The deposit beverage container fees for a six-pack will increase to 39 cents; for a 12-pack, 78 cents, and for a 24-pack, $1.56. Redeeming and recycling 24 containers will recover $1.20, but the additional 36-cent fee belongs to the government.

Second are Hawaii’s small retailers and convenience store operators, whose beverage sales are primarily single units or containers. On a bottle of water, for example, the deposit fee remains at 5 cents; the handling fee will rise to 1½ cents. But there is no half-cent currency! The small retailer will have to "eat" the half-cent on every single unit he sells. In this mandated business model, the more the retailer sells, the more money he loses.

The Department of Health maintains it requires more money to run the recycling program. However, a resolution passed this legislative session (HCR 202) brings a disturbing issue to the surface. Act 176, which established the Deposit Beverage Container Law, requires the state auditor to perform bi-annual management and financial audits on the recycling fund. HCR 202 asks that the department refrain from imposing the increase until an audit is conducted.

The last audit performed on the fund was completed in November 2005 and concluded that the department had failed to establish a financial accounting system to ensure that transactions are properly recorded and reported and that assets are safeguarded. The audit further concluded that the program lacked numerous internal controls over cash receipts and disbursements and financial reporting which created opportunities for potential abuse and untimely financial reporting.

The auditor has not submitted audit reports since then, and consequently, the Legislature has not received any financial accounting of this extremely lucrative fund for 2006, 2008 and 2010. And by lucrative, I mean that this program has collected approximately $400 million from Hawaii consumers and currently continues to collect more than $50 million a year.

Despite this lack of accountability, the Health Department is proposing this increase, which will net an additional $5 million a year for the department. Requiring this increase in light of the egregious lack of financial oversight defies fiduciary responsibility and is an affront to Hawaii’s consumers and small business owners.

The Deposit Beverage Container Program has successfully diverted cans and bottles from our landfill and increased recycling of these items. Isn’t it ironic that Hawaii’s residents, who are to be commended for the success of this program, will now be over-burdened with higher beverage cost, despite the lack of any accountability or integrity of the program management?