BOTTLE DEPOSIT; FUNDING S.B. 1112 (S-2) & 1113:
SUMMARY OF BILL
REPORTED FROM COMMITTEE
Senate Bill 1112 (Substitute S-2 as reported)
Senate Bill 1113 (as reported without amendment)
Sponsor: Senator Sean McCann
Committee: Energy and Environment
CONTENT
Senate Bill 1112 (S-2) would amend Initiated Law 1 of 1976, which governs bottle deposits
in the State, to expand the Law to require dealers to accept and grant the full refund value
for an empty bottle of any kind, size, and brand sold in the State, regardless of whether the
container was sold by that dealer. Additionally, the bill would create several funds. Money
from these funds would be used to fund several departments in their administration of the
bottle deposit law and grants to water suppliers to develop water affordability programs. The
Department of Environment, Great Lakes, and Energy (EGLE) also could spend money from
these funds to fund consumer education, research grants, and system improvement grants.
Senate Bill 1113 would amend the Income Tax Act to require the Department of Treasury to
modify disbursement requirements for several funds.
Taken together, the bills would expand Michigan’s bottle deposit Law and create several funds
supported by deposits. Currently, Michigan law allows residents to return soft drink, soda
water, non-alcoholic carbonated drink, beer, ale, and other malt drink bottles to a dealer from
which it was purchased to receive a partial refund. The bills would not take effect unless
approved by a majority of electors voting on the question at the general election to be held
November 3, 2026.
MCL 445.571 et al. (S.B. 1112)
206.695 (S.B. 1113)
BRIEF RATIONALE
According to testimony, there are currently 2.0 billion containers used in Michigan every year
that are not covered by the current bottle deposit system. Reportedly, many of these
containers end up in Michigan’s streams, lakes, parks, and streets. The bills would expand
the list of collected containers and move the State closer to universal collection of containers.
Many of these containers were not yet conceived of when voters decided to enact the bottle
law almost fifty years ago and so the bills have been suggested.
Legislative Analyst: Nathan Leaman
FISCAL IMPACT
The bills would have an indeterminate fiscal impact on State government and on local units
of government.
Bottle Deposit Fund
The impact that the inclusion of new beverage container types for deposit would have on
State revenue is unknown. If the redemption rate remained the same as under current law,
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increased revenue would be deposited into the Bottle Deposit Fund due to the increase in the
overall volume of containers for which deposits were paid but not refunded to customers.
If the inclusion of new container types were to result in an increase in redemptions, the
amount deposited into the Bottle Deposit Fund likely would decrease, though, as noted above,
this could be partially offset by the large volume of newly eligible containers. It is also possible
that increased investment in redemption centers, machines, and other system improvements
funded under the bill would encourage more customers to redeem deposit containers, with
the same result. Conversely, if the changes were to result in a decrease in the rate of return
of eligible containers, then the amount deposited into the Bottle Deposit Fund could increase.
Senate Bill 1112 (S-2) would alter the required disbursements from the Bottle Deposit Fund.
Currently, 75% is deposited into the Cleanup and Redevelopment Trust Fund and the
remaining 25% is paid to dealers in proportion to the number of containers handled by each
dealer. Under the bill, 40% would be distributed to the Trust Fund, 10% would be distributed
to the newly-created Water Security Fund, 25% would go to dealers and redemption centers,
20% to distributors, and 5% to manufacturers, each on the basis of the number of empty
containers redeemed.
Beverage Container Handling Fund
Senate Bill 1112 (S-2) also would create the Beverage Container Handling Fund in the
Department of Treasury (DoT). Senate Bill 1113 would require $60.0 million of Corporate
Income Tax revenue to be deposited into the Handling Fund beginning in Fiscal Year (FY)
2026-27, should revenue be available. The DoT would adjust this amount annually using the
U.S. Consumer Price Index. The creation and management of this Fund likely would result in
administrative costs for Treasury. As a result of this deposit, there would be a corresponding
decrease in the amount deposited into the General Fund. The creation and management of
the Handling Fund likely would result in administrative costs for Treasury.
It is possible that the Fund revenue could be appropriated to allow administrative activities,
although this is not specified in the bills. In FY 2024-25, $250,000 was appropriated to the
DoT from the Bottle Deposit Fund for administrative activities related to the Act.
Based on an appropriation of $60.0 million, Table 1 below summarizes the amounts that would
be spent from the Handling Fund. It is expected that these funding amounts would be
sufficient to cover related expenditures for EGLE and the Department of Licensing and
Regulatory Affairs (LARA).
Table 1
Percent Amount Recipient Purpose
85% $51.0 million EGLE Deposited into Resource Recovery
Fund for system improvement grants
6% 3.6 million Bottle Bill Enforcement N/A
Fund
6% 3.6 million EGLE Staffing and programs related to the
Act
1.5% 900,000 EGLE Marketing participation and compliance
with the Act
1.5% 900,000 LARA Staffing and programs related to the Act
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Bottle Bill Enforcement Fund
The bill would increase the amount distributed to the Department of State Police from the
Bottle Bill Enforcement Fund. Current FY 2024-25 appropriations from the Fund to the State
Police total $1,007,600. Under the bill, this amount would increase to $1.8 million. Funds are
used for bottle deposit law enforcement within its Investigative Services Division and its
Commercial Vehicle Enforcement Division.
The Department of Attorney General could have increased expenses associated with
enforcement of the Act; however, per the language of the bill, the Attorney General would
receive an additional $1.8 million from the Beverage Container Handling Fund annually to
cover these expenses. No additional full-time equivalents (FTEs) would be included in the bill
but could be included in future appropriations or via the budget process. The average annual
cost of an FTE is approximately $138,900.
Currently, money deposited into the Bottle Bill Enforcement Fund remains in the Fund at the
close of the fiscal year. Under Senate Bill 1112 (S-2), the funds deposited at the close of the
fiscal year would instead lapse to the newly-created Resource Recovery Fund. The Department
of Treasury likely would incur some administrative costs associated with directing the
investment of the Resource Recovery Fund, but existing appropriations likely would be
adequate to cover these costs.
In addition, it is possible that local units of government could experience minor changes in
expenditures due to the bills. The expansion of the bill to new types of beverage containers
could potentially result in decreased litter to be collected or reduce local volumes of trash and
recycling.
Resource Recovery Fund
Under the bills, EGLE would be responsible for spending money from the Resource Recovery
Fund upon appropriation. Under the first described distribution of the Handling Fund included
in Senate Bill 1112 (S-2), 85% of the funds deposited into the Beverage Container Handling
Fund would be directed to the Recovery Fund to be used for system improvement grants. The
Fund could receive deposits from other sources for system improvement grants and other
specified purposes upon appropriation.
It is likely that DoT would incur additional administrative costs associated with the creation
and management of the Water Security Fund due to the likelihood that the average balance
of the Fund would exceed $1.0 million.
Cleanup and Redevelopment Trust Fund
Senate Bill 1112 (S-2) would decrease the percentage of the Bottle Deposit Fund that was
distributed to the Cleanup and Redevelopment Trust Fund from 75% to 40%. Based on FY
2022-23 redemption rates and deposit amounts, deposits from the Bottle Deposit Fund into
the Cleanup and Redevelopment Trust Fund would decrease from about $78.7 million to about
$42.0 million; however, it should be noted that these figures do not account for the increase
in eligible container types included in the bill.
Senate Bill 1112 (S-2) also would specify that the lesser of 25% or $10.0 million of deposits
into the Cleanup and Redevelopment Trust Fund would have to be used for certain
environmental cleanup and programming purposes. The remaining percent distributions from
the Trust Fund would remain the same as under current law, but each of the funds would
receive a smaller percentage of the total Cleanup and Redevelopment Trust Fund deposit
compared to current law due to this new initial distribution. These distributions include the
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Cleanup and Redevelopment Fund and the Community Pollution Prevention Fund; however,
it is not possible to determine whether the changes in the bill would result in decreased or
increased revenue to these funds. These funds are typically spent upon appropriation by EGLE.
The bill would not alter the current distributions from the Trust Fund; however, it would
increase the cap on the Trust Fund balance from $200.0 million to $500.0 million. Upon
reaching the cap, interest and earnings from the Trust Fund are required to be appropriated
for environmental remediation purposes.
Water Security Fund
Senate Bill 1112 (S-2) also would create the Water Security Fund in Treasury. It would require
that 10% of the Bottle Deposit Fund be annually disbursed to this Fund, and EGLE would be
permitted to spend money from the Fund upon appropriation for specified purposes, including
grants to qualifying water suppliers for affordability programming and grants to non-profit
organizations or institutions of higher learning for water security research and programs.
It is likely that the DoT would incur additional administrative costs associated with the creation
and management of the Water Security Fund due the likelihood that the average balance of
the Fund would exceed $1.0 million.
Date Completed: 12-9-24 Fiscal Analyst: Bruce R. Baker; Elizabeth Raczkowski
Cory Savino, PhD; Michael Siracuse; David Zin
SAS\Floors2324\sb1112
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
statement of legislative intent.
Page 4 of 4 Bill Analysis @ www.senate.michigan.gov/sfa sb1112-1113/2324


Statutes affected:
Substitute (S-2): 445.571, 445.572
Senate Introduced Bill: 445.571, 445.572