OKLAHOMA CITY—The Oklahoma state legislature's decision to drain the tire recycling fee fund is unconstitutional and hurts the state's tire recycling efforts, said Max Daughtrey, owner of Four D Corp. "Basically, it's taxation without representation," Mr. Daughtrey said.
His Duncan, Okla., business depends on the state scrap tire fund for reimbursement of recycled tires.
Because the legislature raided the fund, Mr. Daughtrey said he will need to cut back on tire collections.
Mr. Daughtrey usually takes in 50,000 to 70,000 tires per month at his plant, which shreds them and then sells them for other uses.
Typically, the fund took in $280,000 from fees and paid out $295,000 to recyclers, Mr. Daughtrey said. The shortfall was made up from interest earned on the multimillion-dollar fund.
The state pays recyclers $90.91 for each ton of tires processed. The tipping fee accounted for a one-third of his business's income, he said.
If there aren't enough funds to meet all of the state's recycling reimbursement requests, state law calls for recyclers and other end-users to be paid on a pro-rated basis, meaning the firm that recycles 90 percent of the tires would get 90 percent of the available funds.
Such a policy favors large recyclers, Mr. Daughtrey said. "Little guys are hit the hardest," he said.
Firms planning to begin using recycled tires are re-evaluating their options, said Fenton Rood, manager of the Department of Environmental Quality.
A Tulsa, Okla.-area cement plant was considering using recycled tires as fuel for its kiln, but the lack of available funds has caused concerns about the viability of such a project, Mr. Rood said.
Meanwhile, a state lawmaker is challenging the transfer of the tire fee money to the state general fund. Rep. Kevin Calvey, R-Del City, claims the move violates a state law that prohibits tax increases without a vote of the people. A judge refused to issue a temporary restraining order to prevent the state law that transferred the funds from taking effect July 1.