Pennies are then coined by the U.S. Mint, a unit of the Treasury Department, at its Denver and Philadelphia facilities. We examined the government’s cost to produce and distribute the penny; the public’s attitude toward the penny; the budgetary and operational impact on the Mint of eliminating the penny; other economic impacts associated with eliminating the penny; the environmental impact of producing and disposing of pennies; and how prices for cash transactions could be rounded. This adjustment increased the total cost of penny production in fiscal year 1994 by $9.6 million. According to Americans for Common Cents, an organization that has been formed to encourage the continued production of the penny, the discontinuation of penny production could result in the loss of (1) 356 jobs in the zinc refining and smelting industry, (2) $700,000 in sales of chemicals used for penny production, (3) $1.2 million in wages for truck drivers who transport penny blanks to the Mint, and (4) an unknown number of railroad jobs from a decrease in rail shipments from Alltrista to the Denver Mint and in transportation of slab zinc to refining and smelting operations. We did not verify these estimates. Officials from both states said that rounding sales taxes to the nearest nickel would not be a problem. One of the five charitable organizations said that eliminating the penny could negatively affect donations. lost if the penny were eliminated, it is not known what portion of the pennies in circulation would be returned and whether the Mint would incur a substantial cost.
Why GAO Did This Study

GAO discussed the continued production of the U.S. penny.

What GAO Found

GAO noted that: (1) Congress needs to address several issues in deciding the future of the penny; (2) the government spent $8.5 million to $9.2 million in fiscal year (FY) 1994 distributing and handling pennies; (3) public attitudes towards the penny are mixed, but the majority of the public supports retaining the penny; (4) in FY 1995, almost 66 percent of pennies did not circulate compared to almost 12 percent of quarters; (5) it could not determine the full budgetary impact of eliminating the penny, but the U.S. Mint would be negatively impacted if billions of pennies were returned; (6) eliminating the penny would result in the loss of jobs for the two contractors who produce zinc penny blanks and for other related businesses; (7) states' ability to collect sales taxes would not be affected by the elimination of the penny, but charitable donations might be affected; (8) penny production and disposal cause no significant environmental problems; (9) proposed legislation would provide a framework for rounding to the nearest nickel and would exempt noncash transactions from the rounding requirement; and (10) military facilities in Europe eliminated the penny in 1980 and received few complaints.