The Hawaii Auditor’s Office is not releasing several audits of the state’s so-called bottle-bill program, reports that are key to tracking where millions of dollars in state money is going.

The first audit, done in 2005, of the state’s deposit beverage container program is the only one that has been made public even though the audits have been done every other year since then.

But even the agency that oversees the program has not seen these legally required audits or received a reason as to why the office is withholding them.

“We’re being scrutinized but for one reason or another it’s just not being released,” said Darren Park, coordinator of the state Office of Solid Waste Management which runs the program.

Critics fighting a long-proposed increase in the container fee have said that the Auditor’s Office has failed to perform the regularly required audits.

The Auditor’s Office said last week that the 2005 audit, which reviewed the program’s first year in action, is indeed the only one available at this time.

“Unfortunately, our deposit beverage container program audits are delayed,” Deputy Auditor Jan Yamane said in an email last week.

In an interview Monday, she would not provide any reasons for the delay or speculate as to when the audits would be finalized.

“We’re trying to break up the log jam,” Yamane said.

Park said the Auditor’s Office has done the required audits as scheduled. But the auditor has kept all but the 2005 review in draft form, he said, unavailable to anyone outside the Auditor’s Office.

He said officials from the Department of Health, which his office falls under, have looked into it — even contacting the firm contracted to do the audits, Accuity.

“Your guess is as good as mine,” he said when asked why the audits haven’t been completed.

Park said the Auditor’s Office recently called to notify him that the 2012 audit of the program will start in August.

Officials said the oversight is critical because millions of dollars flow through a revolving fund from the 1-cent fee and 5-cent deposit on cans and bottles sold throughout the islands.

The law was passed in 2002 and the program was implemented in 2005.

Commonly called the “bottle bill,” the legislation requires the Auditor’s Office to “conduct a management and financial audit of the program for fiscal years 2004-2005 and 2005-2006, and for each fiscal year thereafter ending in an even-numbered year.”

Former state Rep. Mina Morita, who now heads the state Public Utilities Commission, was instrumental in getting the law passed.

“The audits were directed because there were a lot of people who were uncomfortable with the program to begin with, knowing that it may involve large sums of money,” she said Monday. “The audits gave legislators some comfort that there would be some kind of independent oversight.”

Michelle Tang, distribution center manager at Coca-Cola Bottling Company of Hawaii, raised concerns over the lack of audits in March 29 testimony opposing a half-cent increase in the container tax. The Department of Health is expected to decide next month whether to implement the increase, which would take effect Sept. 1.

She said this fee increase should not be considered until legal obligations are met, including auditing the finances of the program and addressing concerns raised in the 2005 audit about the use of funds.

“To the extent that program funds are being used to support extra handling fees, special grants, the State’s general fund (Act 192 of 2010), and other non-core purposes, it raises the prospect of increasing costs to consumers again. A comprehensive audit will examine and address these concerns,” Tang said. “Failure to conduct statutorily-required audits, especially when the sole audit that was conducted raised serious concerns, is troubling to our industry.”

The DOH, which runs the program, has considered increasing the fee for the past few years because operational costs have outpaced revenues due to high redemption rates. Basically, people are turning in so many cans and bottles and collecting the 5-cent deposit that there’s not enough money left to run the program.

“I don’t think that anybody, at least from the distributors’ part, thought the program would be as successful as it is,” Morita said. “What’s really alarming is how many beverage containers and water bottles people are consuming. Imagine what we would be dealing with if we weren’t taking this out of the landfills.”

In fiscal year 2010, for instance, the department collected $54 million in container fees and deposits from distributors. But it paid out nearly $55 million to redemption center operators for redeemed deposits and eligible handling fees and another $2.6 million for program administration and activities, according to the Department of Health’s 2011 report to the Legislature.

Reserves have been used to sustain the program, but as those funds dry up the department has had to look at increasing fees.

Public participation has remained strong, with roughly three-fourths of containers being redeemed annually in recent years. In 2010, more than 686 million cans and bottles were redeemed out of about 900 million sold, according to the 2011 report.

Reports to the Legislature

The first audit identified a list of issues, and actions were recommended. Most problems were addressed although concern remains over a few things including an unverifiable payment system.

But no audits have been released since then.

A Civil Beat review of the Department of Health’s annual reports to the Legislature from 2007 to 2012 shows that the department was tracking the status of the audits until 2011. After that, the only mention of audits in the 2012 report has to do with one the Department of Health itself planned on redemption center companies.

The reports also reveal that the program underwent its second audit as scheduled for FY 2006, but the department never received the official results. There was no statement as to why the results were withheld.

Subsequent reports to the Legislature say the department was still awaiting the results of the 2006 audit, had scheduled another one for 2008 and was planning a different one for recycling companies operating as redemption centers.

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