In Massachusetts, both parties want $1B for climate but disagree on source

Source: Ines Kagubare, E&E News reporter • Posted: Wednesday, March 6, 2019

The Republican governor of Massachusetts and the state’s top Democratic lawmaker agree that they need to spend a fortune to avert damage from climate change.

But they disagree where the money should come from.

Gov. Charlie Baker (R) and House Speaker Robert DeLeo (D) are promoting similar bills to help cities and towns combat the impacts of rising temperatures through grant programs. Both would provide $1 billion over the next 10 years for climate-resilient infrastructure.

DeLeo’s bill, known as the “GreenWorks Resilient Communities Investment Plan,” would be funded by borrowing money through bonds. The details are sketchy because the bill hasn’t been filed. The speaker unveiled his proposal last week in Somerville during a visit to Greentown Labs, the largest clean tech business incubator in the U.S.

“Not only will cities and towns have the ability to cut greenhouse gases and lower long-term energy and operating costs, but they will adopt Massachusetts-made innovative technologies and put people to work on clean tech infrastructure projects,” DeLeo said in a statement.

Under his proposal, local communities would apply for grants to invest in energy-efficient buildings, solar panels, energy storage and electric vehicle charging stations.

On the other hand, the governor’s bill, which was introduced in January, would raise the real estate transfer tax by 50 percent to generate $1 billion for climate-related projects over the next 10 years. The money would help communities invest in stormwater projects, drainage and culvert improvements, and drought mitigation.

The bills have similar objectives but very different funding sources.

David Levy, professor of management at the University of Massachusetts, Boston, and co-director of the Sustainable Solutions Lab, said both measures lack ambition.

“It’s a start, but it’s inadequate in terms of the scale of the funding,” Levy said.

He suggested that a carbon tax or a gas tax increase would generate more money than the governor’s plan. Massachusetts has one of the lowest gas taxes in the Northeast at 26.5 cents a gallon, Levy said, so raising it 5 cents per gallon shouldn’t garner much opposition. That could raise $156 million a year.

A carbon tax would raise a lot more. According to a report he co-authored last year, revenue from a carbon fee in Massachusetts could amount to $1.5 billion over 10 years.

“If we’re going to raise the funds that we need for climate adaptation, we should do it in a way that helps the market,” Levy said.

He also thought that the governor’s idea to tax property transactions was an “odd choice.”

A downside to the proposal, Levy said, is that all property owners who sell their homes would pay the higher transfer tax regardless of whether their properties are inland or along the coast. Inland owners might wonder why they’re getting taxed even though their properties are not directly affected by sea-level rise, Levy said.

The real estate industry in Massachusetts expressed concerns that the tax outlined in Baker’s bill could hinder economic development.

“Our feeling is that with an issue like climate change that would affect every resident of Massachusetts, the responsibility of taking on this challenge should be behind every resident of Massachusetts, not just those selling properties,” said Tamara Small, CEO of NAIOP Massachusetts, a commercial real estate association.

Some disagree with Small’s assessment. Jack Clarke, director of public policy and government relations at Mass Audubon, said the risks of climate change threaten the entire state.

“The governor has done a very good job in terms of his action on climate change,” Clarke said. “His program has a fee on real estate where the money would go back to cities and towns to protect real estate from the impacts of climate change.”

Clarke, who was appointed by Baker to the state’s coastal erosion commission, noted that 85 percent of the state’s 6.7 million residents live within 50 miles of the coast.

Richard Sweeney, an environmental and energy economics professor at Boston College, said that both bills would benefit local communities. But it’s unclear what kind of bonds would be used under DeLeo’s measure, he said.

“I think the real estate tax isn’t the worst way to raise money to protect real estate,” Sweeney said.

As for DeLeo’s bill, Sweeney speculated that spending cuts and a tax hike on some sectors would be needed in order to repay the money borrowed to fund the climate program.

Massachusetts, which has been leading the fight against climate change, has taken steps to reduce its greenhouse gas emissions from the power sector through its participation in the Regional Greenhouse Gas Initiative. But Sweeney said a carbon tax would raise a lot more money.

“The first best thing from an economic perspective would be a [carbon] tax, but politically I totally recognize, like Washington has shown us, that that can be really hard,” Sweeney said.

Washington state lawmakers failed to pass a carbon fee last year.