An Arkansas Senate panel on Friday advanced a bill that aims to restructure the state's tire recycling program and is expected to generate roughly $3 million to $4 million in new fees to help properly dispose of tires.
Senate Bill 508 by Sen. John Payton, R-Wilburn, passed the Committee on Public Health, Welfare, and Labor in a voice vote without audible dissent. The bill, which received opposition from state government officials who asked lawmakers not to increase fees on Arkansans, moves to the full Senate for further consideration.
While generally in favor of privatization, Payton said bolstering government subsidies is currently the only effective way to ensure waste tires are properly processed.
"We have a great industry in Arkansas that deals with processing these tires, but they can't do it for free. They have huge, very unique machines to deal with shredding and destroying these tires," Payton said. "Those machines are expensive, the maintenance is expensive, the labor. Transporting those tires cost money."
Properly disposing of tires is important for protecting public health and the environment. If left in waste dumps, tires may fill with water and draw mosquitoes and varmints. Payton told committee members tires do not naturally decompose or degrade.
To address the issue, Payton said lawmakers during previous legislative sessions enacted fees on the sale of new tires and the removal of tires from vehicles. In recent years, these fees have fallen short of covering the cost of processing old tires, he told the committee.
SB508 would expand the definition of small tires, which are subject to a $3 fee when purchased new at tire shops, to include standard pick-up trucks, light-duty trucks, lawnmowers, golf carts, trailers and low-profile vehicles. Under current law, only tires for automobiles, motorcycles and all-terrain vehicles are considered "small tires."
The bill would also impose the $3 new tire fee for each tire included in the sale of new vehicles.
[DOCUMENT: Read the bill to amend tire law » arkansasonline.com/41sb508/]
The measure would allow fees of up to $7.50 for purchasing large tires and $30 for purchasing extra-large tires. Payton said large tires are commonly used on semi-trucks and extra-large tires are generally used on tractors and large construction equipment. Under the current fee structure, Payton said the state was not collecting enough to process these tires. Even with increased fees, he said owners of vehicles with small tires would be subsidizing the disposal of extra-large tires, which can cost $100 each to process.
The bill would repeal a "rim removal" fee in current law, which is imposed when a retailer replaces a tire on a vehicle. Payton said this regulation had disrupted the resale market for used tires, leading to retailers disposing of old tires rather than providing them to customers who could reuse them.
"We want to encourage those used tires to change hands, get mounted on another vehicle and get worn out before we have to process them," he said.
Lauren Ballard, chief legal counsel at the Arkansas Department of Energy and Environment, spoke against the increased fees in the bill. She noted current law permits retailers to keep a portion of the new tire fee but under the bill retailers could charge up to 10% of the fee per tire to cover administrative costs.
When asked by lawmakers if she could offer a solution for effectively processing waste tires, Ballard said, "I don't know that this bill addresses that problem. I think this bill just puts more money into it, and that may be the solution and maybe it isn't."
The bill also would shift the administration of the state's Used Tire Recycling Fund from the Arkansas Division of Environmental Quality to the Department of Finance and Administration.
Ballard said the Department of Energy and Environment had concerns about the delineation of responsibility between the state agencies under the bill.
Paul Gehring of the Department of Finance and Administration also opposed the increased fees included in the bill. While the department had not finalized a fiscal impact statement, Gehring said officials estimated fees imposed on tires for new vehicles would be around $2.37 million. For new trailers, officials expected the fees to be around $318,000.
While Gehring said general revenue funds last fiscal year were used to support the tire disposal program, he did not have an exact figure on hand. These funds were needed to cover transportation expenses after a rise in the cost of diesel fuel.
Gehring spoke in favor of a provision of the bill that he said would allow the Department of Finance and Administration to administratively close businesses if they don't provide state officials with the rim removal tire fees they've collected from customers. He said the state has $4.6 million in delinquent waste tire fees.
"That would be an additional source for us to collect the fees that are out there and outstanding," he said.
Payton said he expected his bill to generate in the neighborhood of $3 million to $4 million.
SB508 would divide the state into four "tire accountability zones" each governed by a board responsible for overseeing the transportation and processing of old tires. The 11-member panels would be comprised of seven county judges and four mayors from the counties and municipalities within the zones.
These panels would have the authority to set the fees for large and extra-large tires. Payton said he expected the boards to endorse the $7.50 cap for large tires and the $30 maximum for extra-large tires.
Doug Erwin, president of the County Judges' Association of Arkansas, said all 75 of the state's county judges support the bill. Erwin told lawmakers he expected county judges on the tire accountability zone boards to endorse raising the fees for large and extra-large tires to the maximum allowed by the bill.