Wasted Tax Dollars and What Goodyear Might Do With New Cash

Seems the state of New York has caught the same fund-misdirection bug that has plagued states like Georgia and others for years. Money taken in on tire purchases that was supposed to go toward waste tire management efforts gets side-tracked to general funds – or worse – leaving scrap tire disposal programs scratching for help.

Since its program was enacted in 2003, New York has charged $2.50 per tire to Joe Tirebuyer to make sure the state’s scrap tires are safely and effectively repurposed or disposed. But in a Feb. 12 report, CNYCentral.com revealed that “the majority of the fee now pays for salaries and state expenses that may have little to do with the disposal of used tires.”

Whether you call it a tax, a fee or a surcharge, New York State collects $2.50 for the purchase of every tire sold in the state. It’s the price you pay for the Waste Tire Management Fee which was imposed in 2003 to fund the clean up large tire dumps. But a CNY Central investigation has found that the majority of the fee now pays for salaries and state expenses that may have little to do with the disposal of used tires.

The surcharge, tax, fee, whatever you want to call it was brought into existence after a massive 10-million-tire fire and continuing scrap tire disposal problem cost the state hundreds of millions of tax dollars. However, the surcharge, set to expire in 2010, has been extended twice. The State Department of Environmental Conservation claims that the fee racks up $26 million annually.

But today only 23% of the amount collected actually goes to cleanup of tire dumps and other abatement efforts.

The state general fund takes $6 million from the fee pool, while another $14 million goes to the salaries of employees in the DEC’s Hazardous Waste Division, according to CYNCentral.com’s report.

CNYCentral.com asked New York Gov. Andrew Cuomo if it was time to do away with the tire tax. “Cuomo replied, ‘We will be reviewing that tax through this legislative session. Obviously there are differing opinions on the tax, but it’s one of the taxes on the table to look at.’”

So, no.

During a January hearing on the matter, State Sen. John DeFrancisco, chair of the Senate Finance Committee, “asked DEC Commissioner Joseph Martens for an accounting of the money collected through the Waste Tire Management Fee. DeFrancisco wanted to know how many DEC positions are funded through the tax and whether the money is ‘really being used for waste tire cleanup or for other employees.’”

Martens reportedly offered: “The short answer is both…it is cleaning up the waste sites and it funds employees making sure those sites are cleaned up.”

The Committee later gave CNYCentral.com the DEC’s response to Sen. DeFrancisco’s inquiry. Apparently, said the DEC, the Waste Tire Management Fee has been renamed the Waste Management and Cleanup Fund, and that fund pays the salaries of “141.3 DEC employees at an annual cost of $17.4 million.”

Based on that figure, even less money is apparently being put toward cleanup and abatement.

Defending itself further, the DEC claimed to have cleaned up 12 tire dump sites in the past two years and since 2003 has spent $115 million on waste tire abatement, or about $11.5 million per year. Out of $26 million collected.

The tax is slated to end in 2016. Unless extended yet again.

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One of the least publicized things revealed in Goodyear’s 2013 financial report is that the tiremaker has fully funded its pension plan for retired hourly workers.

The $1.1 billion the tiremaker paid into the plan eliminated a massive boat anchor from around its corporate neck. Its underfunded pension obligations were cited in 2012 reports on CNBC that Goodyear could be on the block, and was oft mentioned by industry watchers as a major concern hanging over the East Exchange St. headquarters.

Last year, Goodyear changed addresses, moving into new digs down the street, and finally shed that boat anchor. Free of that headache, the tiremaker can now apply money it was paying toward pension obligations and refocus it on growth projects. Like new products and plant improvements.

As you have likely experienced firsthand, the past few years have seen rapid changes in the tire industry. Supply chain delays, labor constraints and the shift to electrification—among countless other macro challenges—are constantly requiring dealers to reevaluate their business strategies and operations to adjust to the current environment. It’s critical that flexibility and resiliency remain top-of-mind as dealers navigate these obstacles. One way to remain agile is fostering a culture of learning and development for your staff. At ATD, we’ve found that integrating technology, insights and data analytics into our reskilling and training programs is helping to create sustainable solutions. By understanding the importance of training and how to build an effective program, you, too, can take advantage of the many benefits for both you and your business.