California Revised Budget Proposes $200M Boost for Recycling and PET Recovery

Revised CA Budget Includes $200M for Recycling Programs in California

California’s revised 2026-2027 budget proposal includes more than $200 million in funding aimed at strengthening the state’s beverage container recycling system. The proposal focuses on stabilizing recycling markets, improving material quality, expanding redemption access, and supporting in-state plastic recycling infrastructure.

The updated proposal from CalRecycle comes as recycling companies and environmental groups continue pushing for stronger financial support for PET plastic reclaimers facing market instability and rising operational costs.

California Proposes Major Investment in Beverage Container Recycling

The revised budget includes several key investments funded through California’s Beverage Container Recycling Fund (BCRF):

• $75 million to expand in-state manufacturing for recycled materials.
• $60 million of that allocation would extend the Plastic Market Development Payment (PMDP) program through July 1, 2029.
• A one-time $100 million investment for Beverage Container Quality Infrastructure grants to improve sorting and processing capacity for California Redemption Value (CRV) materials.
• A one-time $50 million allocation to support rural recycling programs and improve consumer access to CRV redemption services.

Industry leaders say the funding could help modernize California’s recycling infrastructure while supporting a more stable circular economy.

Industry Leaders Welcome the Funding Proposal

Heidi Sanborn, executive director and CEO of the National Stewardship Action Council, said California is trying to modernize a system facing increasing pressure from higher recycling volumes and evolving public expectations.

According to Sanborn, investments in recycling access, processing capacity, and stable end markets are essential if California wants collected beverage containers to become new products instead of waste.

Kate Bailey, chief policy officer at the Association of Plastic Recyclers, described the proposal as a timely and significant commitment to PET recycling during a difficult market period.

PMDP Extension Sparks Debate

Despite broad support for extending the PMDP program, some stakeholders believe the proposal does not go far enough.

Mark Murray, executive director of Californians Against Waste, said recycling advocates have spent nearly a year urging lawmakers to extend and increase PMDP subsidies.

Murray described the proposal as “a half step in the right direction,” arguing that direct market incentives are more effective than grant-based funding.

He also expressed concerns about expanding CalRecycle’s authority over grant distribution, saying California already has an established recycling infrastructure that needs operational support rather than competitive grant programs.

PET Recyclers Push for Higher Subsidies

Sally Houghton, executive director of the PET Recycling Corporation of California, said reclaimers need predictable long-term funding instead of temporary grants.

Houghton emphasized that companies require financial certainty before making new investments in recycling operations and infrastructure.

Paul Bahou, president of Global Plastics Recycling, said the current PMDP payment level of $150 per ton is no longer sufficient to support reclaimers.

Industry advocates are now pushing for an increase to $300 per ton, arguing that stronger incentives are necessary to prevent further closures within California’s PET recycling sector.

Bahou also warned that California’s growing recycled-content mandates and SB 54 packaging regulations will require significantly more domestic processing capacity in the coming years.

What Happens Next?

California lawmakers are now negotiating the final version of the 2026-2027 state budget.

The state Assembly subcommittee began hearings on May 19, while the Senate subcommittee is scheduled to meet on May 21. Legislators must finalize and pass the budget bill by June 15 before sending it to Gavin Newsom for approval.

Meanwhile, California lawmakers may also review AB 1149 this summer. The bill would:

• Increase PMDP payments from $150 to $300 per ton for qualifying in-state PET recyclers.
• Cap annual PMDP spending at $35 million.
• Extend the program through July 1, 2029.
• Apply retroactively to PET collected beginning Oct. 1, 2025.

Supporters say the legislation could provide the long-term certainty needed to strengthen California’s closed-loop recycling system and expand domestic plastic processing capacity.

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