Toronto’s blue-bin system is breaking down, triggering both alarm at city hall and upcoming penalties for homeowners who toss clothes, black plastics and other non-recyclables in their boxes.

“This is a big problem, a very significant problem,” Councillor Jaye Robinson, public works chair, said after a city official warned of a projected $9.2-million plunge this year in recycling revenues that Robinson called “significant and terrifying.”

Jim McKay, the solid waste general manager, told Robinson and her committee colleagues three factors are bedevilling one of the continent’s most sophisticated city recycling systems.

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Contamination in bins — including black plastic commonly used for takeout food, plastic-lined paper coffee cups and food waste left in jars – now comprise more than one-quarter of the 200,000 tonnes collected annually from Toronto homes, and the problem is growing.

Part of that is homeowner error that lowers city revenue from buyers who sort and sometimes toss it, McKay said, but those buyers are also being more picky. That relates to the second factor, China recently banning the import of some waste and seriously restricting others, shrinking the market.

“A piece of paper with a coffee stain on it is now garbage,” McKay said. “Previously that still would have been able to be recycled. A half-jar of mayonnaise in a blue bin on the street can ruin the entire contents of that blue bin. If it gets mixed around enough it could theoretically ruin the entire contents of the truck.”

The final factor, he said, is a delay in the Ontario government and local partners developing and implementing a system whereby producers of waste are responsible for its sustainable disposal. That theoretically eliminates the need for cities to have, or at least fund, blue-bin systems.

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McKay doesn’t expect to see a plan for the province’s “full responsibility model” for at least one year and predicts it could take another five to 10 years to fully implement.

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Councillors expressed alarm at the revenue shortfall that would require a 3-per-cent hike in garbage fees. McKay noted some cities face even “uglier” scenarios than Toronto which has taken steps including getting changes in some contracts.

Still, Toronto homeowners who fail to use the city’s online waste wizard or take other steps to ensure they put the correct waste in blue bins will soon feel some heat.

Last fall city solid waste inspectors went to about 4,500 curbsides across the city, looking through bins and leaving homeowners notes if there was contamination. They later returned to the same homes and left repeat offenders’ bins uncollected.

The program is about to be expanded citywide, McKay said, adding his staff are also looking at the feasibility of fines for repeat offenders, possibly mirroring the contamination cost.

“Everyone bears the costs of the (recycling) system and we’re trying to figure out how to put some of those increased costs on the people causing them,” he said. Not everyone has to worry — many Toronto highrises with private waste collection don’t even sort waste.

Councillor Giorgio Mammoliti noted the increasing numbers of items accepted in Toronto blue bins, complaining: “You have to have a degree to throw out garbage.”

When Mammoliti suggested Toronto go back to the days of one bin, with the city doing the sorting, McKay said his staff are exploring how that would work with today’s sorting technology — but it would likely boost city recycling costs.

Torontonians’ first priority should be reducing consumption so there is less waste, Councillor Mike Layton said. But he convinced the committee to recommend full council get a staff report on the environmental, social and financial considerations of: single-use takeout containers; plastic straws and cutlery; disposable drink cups and lids; and plastic shopping bags.

Staff would also be asked to explore what “legally permissible controls” the city has to eliminate or reduce use of those items, as well as the waste generated from products and packaging.

In an interview, he said Toronto should not wait for the province to find ways to make manufacturers fully responsible and to ensure, possibly through the city licensing department, that all such waste can be recycled through the city system.

Robinson said all Toronto residents should be concerned by the blue-box dilemma.

“At the end of the day it’s about the environment but its also about the (financial) impact on our residents, and I don’t think they want to be left holding the bag,” she said.