Beverage container fee to rise a half-cent

The cost of a beer or soda likely will creep up in September as the state kicks in a half-cent increase of the beverage container fee.

That’s money that goes to pay for the state’s recycling program — not the nickel refund consumers get when they turn in their empties.

"As a manufacturer and distributor, as you can imagine, I’m not happy about it," said Kent Kurihara, vice president of Hawaiian Sun Products, a locally owned company that produces fruit drinks, chocolate covered macadamia nuts and preserves. "The one who is going to lose at the end is the customer or the retailer."

The state Department of Health announced on Wednesday the fee will increase to 11⁄2 cents from 1 cent beginning Sept. 1.

The increase is expected to generate about $4.5 million annually.

State Health Department Deputy Director Gary Gill said the program now takes in about $55 million a year, but is spending about $59 million, so the increase will erase the shortfall.

The half-cent increase was written into the bottle law to ensure the recycling program could sustain itself and continue to refund deposits to consumers, said state Health Director Loretta Fuddy.

"We were able to hold off a fee increase for four years by using existing funds," she said in a statement. "However, the special fund is now too low to continue the program through 2014, and the current fee is not enough to build critical program reserves necessary to conduct essential operations."

State law requires a container fee increase if the redemption rate exceeds 70 percent. The Health Department said the statewide redemption rate from July 1, 2011, to June 30 was at 77 percent, up from 76 percent the previous year.

The fee increase was not implemented in 2008, 2009, 2010 or 2011 because the program was able to use funds in reserve to continue operations. This year, however, the department determined "the current fee structure and special fund balance would leave the HI-5 program underfunded in 2014 and unable to continue operations," the news release said.

Kurihara opposes the recycling program, saying it financially penalizes the community to get them to recycle. In the past, when individuals recycled their cans and bottles, they would get compensation from the recycler.

"They would do their part to help the environment and would get financial gain from it," he said. "Now if they do their part, they’re going to lose a penny and a half."

The consequences of the fee increase on Hawaiian Sun won’t be clear until the end price for the customer is determined, he said.

"When we know what the true cost to the consumer will be, we’ll have a better idea of the impact on sales it will have," Kurihara said.

"A penny a can is significant with regards to shelf prices and the retail price," he added. If the additional half-cent is rounded off to a cent, "it will be devastating," he said.

Bruce Iverson, director of marketing and development of Reynolds Recycling, said the increase is important to keep the state deposit funds solvent and to ensure containers are recycled rather than going to the HPOWER plant. It’s unfortunate the fee needs to be raised, Iverson said.

"It’s probably a necessary step," he said.

Reynolds Recycling has 40 recycling sites across the state.

Carol Pregill, president of the Retail Merchants of Hawaii, said consumers and small retail stores will be hit the hardest. Sales for smaller retailers and convenience store operators are largely single units, Pregill said.

"What do you do with a half-cent? The retailer will have to absorb the cost."

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On the Net:

» For more information on the state’s Deposit Beverage Container Program, go to www.hi5deposit.com Opens in a new tab.