Dear Mayor:

On Monday, the Senate Environment Committee considered and approved SCS-557, which imposes a recycling tax on solid waste generation in order to provide recycling grants to municipalities and counties suffering from recently declining recycling rates. It is believed the bill will raise approximately $34 million and will be used for local recycling programs.

During last session, if you recall, the League expressed concern about the negative impact of such a tax on some municipalities. For instance, municipalities that provide their own trash pick up would pay the tax in the first year and not receive reimbursing grants until the second year. This "fronting of the costs" would have been significant and have a disproportionate financial impact on municipalities and, in turn, their taxpayers.

The League had extensive conversations with representatives of the Department of Environmental Protection (DEP), other interested parties as well as the primary sponsor, Senator Bob Smith. The result was reflected in language in the Senate Committee substitute approved on Monday, which assures that municipalities, which provide their own garbage pickup, will be made whole through an additional distribution of $11 million in the first year ($8 million from the General Fund and $3 million from Clean Communities Fund). We thank and commend the DEP and Senator Smith for their responsiveness to the League's concerns.

SCS-557 has now been "2nd referenced" for consideration by the Senate Budget and Appropriations Committee.

Funds raised by the new recycling tax will be appropriated annually as follows:

• 60% to municipalities, and eligible counties that collect solid waste, as recycling performance grants and to assist with "pay as you throw" weight based residential waste disposal systems;
• 25% to counties for recycling program funding including household hazardous waste;
• 10% shall be used by the State for program planning and funding, and administrative expenses;
• 5% shall be used by the counties for public information and education program.

You should be aware that in the original version of the bill the percentage dedicated to municipalities was 30% and is now doubled. Furthermore, language in the bill guarantees that no town will receive less in return (from its annual recycling grant) than it paid in annual recycling taxes. Municipalities with active recycling programs should see significantly larger recycling grants than in the past.

As mentioned before, SCS-557 has now been "2nd referenced" to the Senate Budget and Appropriations committee for consideration. While there is significant support for the legislation in both houses, we are concerned that the additional $11 million for municipalities might be targeted for a cut during what will surely be a difficult budget process. For this reason, it is of vital importance to reach out to your State Senator, particularly if your State Senator serves on the Budget and Appropriations Committee, and your Assembly representatives and ask that they make sure that the full funding in SCS-557 is maintained.

The Assembly companion for this bill (A-1886) is sponsored by Assemblymen John McKeon and Reed Gusciora and assigned to the Assembly Environment Committee. Questions on the bill can be directed to Mike Cerra at mcerra@njslom.com or at (609) 695-3481 x20. Copies of SCS-557 can be requested by calling Donna Baltz at (609) 695-3481 x14.

We will advise of developments on this matter.

Thank you.