Arkansas’ new tire recycling program has a problem. There’s not enough money.

Tires sit on the side of the street in east Little Rock recently. Problems continue with the state’s system for disposing of old tires. (John Sykes/Arkansas Advocate)

Arkansas’ new tire recycling program is destined to fail, but state leaders plan to proceed anyway.

Environmental officials are hopeful the program won’t run out of money until early 2025, but they’ve acknowledged a funding shortfall could happen this year. 

That would return the state to where it was two years ago when the recycling fund ran out of money and scrap tires started to pile up.

Despite the $8 million-a-year program’s crash in 2022, the governor and General Assembly have been unwilling to raise the state-mandated tire fees that fund it.

Those revenues haven’t kept pace with rising costs to transport and process old tires.

“Are we just going to be plugging this program as we go like we’ve done in the past?” state Sen. Fred Love, D-Little Rock, asked leaders from the Arkansas Division of Environmental Quality at a recent legislative hearing. 

Caleb Osborne, the division director, acknowledged the funding problem, noting that the General Assembly will likely need to reform the program during next year’s legislative session.

If funding runs dry before the 2025 session, lawmakers could again appropriate state reserve funds to cover the shortfall as they did in 2022. Otherwise, the state’s four tire districts will be left to operate the best they can with only a percentage of the money needed.

“We think we have a window of time where we think we’re going to be able to make a full reimbursement,” Osborne said. “We don’t know how long that will last.

“We understand there may need to be more conversations heading into next session.”

The problem

Scrap tires are a complicated, expensive problem. They can’t be thrown into landfills because they decompose too slowly, hold water and attract pests.

There also has not traditionally been a huge market for the recycled metal and rubber in tires, though there are some promising uses emerging, including as fuel in Northeast Arkansas’ steel mills. 

The transportation of used tires from tire shops and their processing at facilities across the state is funded by the $3-per-tire rim removal fee customers pay when purchasing new tires; the fee is $1 for used tires.

Retailers remit those collections to the state, allowing them to dispose of scrap tires at licensed facilities. (Individuals may dispose of up to four tires a month at state-permitted facilities free of charge.)

In addition to the costs of waste tire transportation and processing, the program also has administrative costs.

A legislative audit conducted last year found that after administrative costs are paid, $2.31 per tire returns to one of the four used tire districts, which then reimburses recycling facilities for processing the material.

However, each of the four districts said processing costs them anywhere from $2.80 to $2.90 per tire. 

The state Legislature approved those elevated rates last week, meaning — despite efforts to limit administrative costs — the program will be underfunded once existing funds are drawn down. 

Once that happens, the four districts will receive pro-rata reimbursement rates based on the amount of tire fees the state collects in a quarter. For example, if the program’s quarterly revenue is 80% of the amount needed to fully fund it, each district would receive only 80% of the amount it submitted for reimbursement.

“We’re optimistic, but we’re a little bit cautious because of the pro rata,” said Conway County Judge Jimmy Hart, the chairman of Used Tire Program 1, which covers much of west and Northwest Arkansas. “We can’t write checks with pro rata. We can’t function and pay our employees and pay for operations with pro rata.”

Solutions

Last year, lawmakers cut the number of tire districts from 11 to four, and the Department of Finance and Administration and Division of Environmental Quality committed to trimming administrative costs to try to free up program funding.

The finance department this year also began citing delinquent tire retailers for not remitting rim removal fees. At the outset, retailers owed about $4.3 million in unpaid scrap tire fees, but all of that amount isn’t collectable because some of those businesses are now defunct.

A department spokesman said that some delinquent retailers sent payments after receiving letters, but the full amount wasn’t available last week.

The department expects it will close down retailers for delinquency by the end of April. 

Squeezing a little extra money through administrative savings and collecting delinquent fees helps, but neither is a permanent solution. 

Lawmakers have discussed two long-term fixes — raising and restructuring tire fees or privatizing the program.

A proposal to raise fees passed the Senate in 2023, but it stalled in the House where it met opposition from Republicans and Gov. Sarah Huckabee Sanders’ administration, which viewed the fee increase as tantamount to raising taxes. A heavily amended version ultimately passed.

Sen. Bryan King, R-Green Forest, said the problem has persisted for two decades, but the Legislature refuses to fix it when in session, fearing electoral consequences.

“People won’t vote for it because they’re worried they’re going to get hit with a postcard that says they raised the cost of tires.”

Alternative to a fee hike, the state could dissolve the statewide tire recycling program, turning it over to the private market.

Local officials participating in the state’s program have a number of concerns with privatization. Chiefly, they believe it would raise costs even more on consumers while making it harder to dispose of tires.

They also think rural areas could be left out entirely because the profit motive wouldn’t be there for private companies to pick up tires in remote places. Under the current model, the tire districts have drop-off and pick-up locations fairly spread out across the state.

“With privatization, you’ll have less service and more expense,” said Justin Sparrow, executive director of the West River Valley Regional Solid Waste Management District in Clarksville.

If the cost and difficulty of disposing tires increases significantly, local officials fear that will increase illegal dumping.  

A spokesperson for Sanders didn’t respond to a request for comment asking what solution the governor preferred for the program.

For now, tire districts and the state hope the program will hold until lawmakers can address the issue in 2025. 

It isn’t clear what the solution will be. What is clear: This big rubber problem isn’t going away.

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