North Carolina – Waste Disposal Surcharge

The state of North Carolina implemented a Solid Waste Disposal Tax of $2 per ton on July 1, 2008, which generated $23 million in FY 2020-21.1 Revenue from the Disposal Tax currently supports city and county solid waste management programs and hazardous site cleanup, and previously supported a Solid Waste Management Trust Fund. The Disposal Tax was created by North Carolina’s General Assembly Session Law 2007-550 (now codified in NC General Statutes – Chapter 105, Article 5G), and is levied on the disposal of both municipal solid waste and construction and demolition debris at landfills and transfer stations. 

“§ 105-187.61.  Tax imposed.
(a)    Tax Rate. – An excise tax is imposed on the disposal of municipal solid waste and construction and demolition debris in any landfill permitted pursuant to Article 9 of Chapter 130A of the General Statutes at a rate of two dollars ($2.00) per ton of waste. An excise tax is imposed on the transfer of municipal solid waste and construction and demolition debris to a transfer station permitted pursuant to Article 9 of Chapter 130A of the General Statutes for disposal outside the State at a rate of two dollars ($2.00) per ton of waste.
(b)    Tax Liability. – The excise tax imposed by this section is due on municipal solid waste and construction and demolition debris received from third parties and on municipal solid waste and construction and demolition debris disposed of by the owner or operator. The tax is payable by the owner or operator of each landfill and transfer station permitted under Article 9 of Chapter 130A of the General Statutes. (2007-550, s. 14(a).)”

 

Taxes are paid quarterly to the state by the owner or operator of each landfill or transfer station, accompanied by applicable waste tonnage records and forms. The Department of Environmental Quality (DEQ) manages these funds and is permitted to retain no more than $225,000 annually to cover collection costs. 

 

Use of Disposal Tax Revenue

Revenue from the Solid Waste Disposal Tax was originally distributed according to the following three allocations; 50% to the Inactive Hazardous Sites Cleanup Fund, 37.5% to redistribution of funds to local governments, and 12.5% to the Solid Waste Management Trust Fund, coded by G.S. 130A 309.12.

However in 2013, the NC legislature redirected the 12.5% of the Disposal Tax revenue originally applied to the Solid Waste Management Trust Fund into the State’s General Fund instead (Session Law 2013-360 p.215). Thus, North Carolina provides an example of where clear waste reduction and diversion efforts funded by a surcharge on waste disposal were ultimately undermined and disbanded due to redirection of funds toward general use by the state legislature.

 

The Former Solid Waste Management Trust Fund 

The Solid Waste Management Trust Fund was established by the Solid Waste Management Act of 1989 to provide technical and financial assistance for local government recycling programs and for recycling market development. 

“§ 130A-309.12.  Solid Waste Management Trust Fund.
(a) The Solid Waste Management Trust Fund is created and is to be administered by the Department for the purposes of:
(1) Funding activities of the Department to promote waste reduction and recycling including but not limited to public education programs and technical assistance to units of local government;
(2) Funding research on the solid waste stream in North Carolina;
(3) Funding activities related to the development of secondary materials markets;
(4) Providing funding for demonstration projects as provided by this Part; and
(5) Providing funding for research by The University of North Carolina and independent nonprofit colleges and universities within the State which are accredited by the Southern Association of Colleges and Schools as provided by this Part”

 

This Fund supported the grantmaking work of the North Carolina DEQ Recycling and Materials Management Section for waste reduction and recycling projects. The Section has administered two competitive grant programs, (1) Community Recycling and (2) Recycling Business Grants, annually since 2003 and administers other grant programs to businesses and/or local governments in response to timely needs and demand.2 Some examples of various other grant programs include a Backyard Composting Grant Program, a COVID-19 Relief Grant Program in 2020, and an upcoming Glass Equipment and Infrastructure Grant for businesses in response to expressed need from stakeholders. 

The grants are available to both public and private organizations and are made on a reimbursement basis with fund matching requirements, both of which increase accountability of state fund expenditure on these grant programs.3 Grants for which local governments are eligible permit the government to meet its cash match requirements using fund distributions from the $2-per-ton Solid Waste Disposal Tax.

Receiving funds from the Disposal Tax facilitated significant expansion of the NC DEQ Recycling and Materials Management Section’s work in advancing waste reduction and diversion, with grant funding expenditures reaching between $2-3 million annually between 2009 and 2013.4 Since 2013, the NC legislature has allocated NC DEQ $1.1 million annually for grant making through legislative budget bills. NC DEQ has continued to provide a wide variety of local government recycling program grants and private recycling market development grants despite the removal of the Disposal Tax and other disposal fee revenue sources, previously provided by the Solid Waste Management Trust Fund. For example in FY 2019-20, almost $1 million in recycling grant funding was awarded to 47 recipients, resulting in 45 new jobs created, 8 million additional tons of plastic recycled, and 55,000 tons of organic material diverted from landfills.5 

Despite the loss of funds from the statewide Disposal Tax and other disposal fee revenue sources provided via the Solid Waste Management Trust Fund, North Carolina DEQ’s grantmaking activities continue to provide important support for achieving statewide diversion and economic development.

 

Local Government Fund Utilization

Thirty seven and a half percent of Solid Waste Disposal Tax proceeds are distributed to eligible North Carolina cities and counties on a quarterly basis, with half of the amount going to cities and half to counties. To be eligible to receive funds, the city or county must provide solid waste management programs or services. Like Minnesota’s grants to local governments, the amount of money distributed is determined based on city or county population.

Though the law only specifies that funds received must be used “solely for solid waste management programs and services,” North Carolina’s DEQ encourages that local governments use the disposal tax proceeds to invest in “recycling and waste reduction programs and services that will expand and enhance the ability for the public to remove materials from the waste stream and decrease the amount of waste sent to landfills.”

Local governments are also permitted to use these funds to fulfill cash match requirements for NC DEQ waste diversion grants, as outlined in the section above. Once the Disposal Tax proceeds are distributed to eligible local governments, the money can be used according to the discretion of the city or county, as long as it falls under the category of a solid waste management program or service. While some local governments use this money solely for maintenance of existing solid waste facilities, others direct funds toward waste reduction and diversion. Wake County’s Solid Waste Management Department, for example, has offered Waste Reduction Grants within the county since 2019 to aid organizations like schools, nonprofits, and businesses in diverting waste from the landfill.

 

More Information

 

1  Personal Communication. Wendy Worley. ​​Recycling and Materials Management Section Chief, North Carolina Department of Environmental Quality. Email. January 7, 2022.
2 Personal Communication. Wendy Worley. ​​Recycling and Materials Management Section Chief, North Carolina Department of Environmental Quality. Video call. Dec 9, 2021.
3 Personal Communication. Wendy Worley. ​​Recycling and Materials Management Section Chief, North Carolina Department of Environmental Quality. Video call. Dec 9, 2021. 
4 Personal Communication. Wendy Worley. ​​Recycling and Materials Management Section Chief, North Carolina Department of Environmental Quality. Email. Dec 10, 2021.
5 Annual Report.” Division of Environmental Assistance and Customer Service, North Carolina DEQ. 2020. p.19

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Original post from January 20, 2022

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Sophia Jones

Sophia Jones is a Policy Fellow with ILSR’s Composting for Community initiative, where she researches, analyzes and supports the building of US policy that advances local composting. Her background in sustainable development and agriculture reflects her interest in solutions-based, community-led development initiatives.