Care About Climate Change? Keep an Eye On the State Budget.

Organizations, businesses, and activists working to push Massachusetts to address climate change tend to spend most of our time focusing on legislation. This makes sense, since the bold policies that are necessary to decarbonize our economy will come from bills, passed into law through the legislative process. But after a bill is law comes the even more important task of implementing the policy behind it, and this is where the budget plays a crucial role.

This session, a controversial new proposal from Governor Baker to change climate funding is drawing attention to the outsized impact state spending (through the annual budget) has on the ability for Massachusetts to fight climate change.

What is the State Budget?

Like any organization, states have to set a budget for themselves every year. The budget allocates resources for the operation of both state and municipal governments and allows the state to spend other funds as agreed on by the legislature and Governor. For the most part, the budget only deals with money and revenue, but it also includes what are called ‘outside sections’ which can be used to pass other policies.

In the current year (FY2020) the process in Massachusetts will look something like this*:

  • January 2019— Governor makes an initial budget proposal
  • April 2019— House Ways & Means Committee releases their draft budget
  • May 2019— Senate Ways & Means Committee releases their draft budget
  • June 2019— Conference committee of legislators meet to resolve differences between House & Senate draft budgets
  • June 2019— Both chambers vote to approve the compromise budget
  • July 2019— Governor either approves final budget sent to him by legislature or vetoes portions
  • July 2019— Legislators meet to override vetoes (if possible)  
  • July 2020— Budget does into effect for all state agencies

[*The dates can be flexible. For more detail click here.]

For context, Governor Baker’s initial proposal for next year layed out an operating budget totaling $42.7 billion, a 1.5% increase over the previous year.

Why Does the Budget Matter?

Fundamentally, the state budget as a mechanism plays a critical role in the effective implementation of climate action policies. The budget is where funds for everything – from state mandated climate studies to clean energy programs – are authorized to be spent. It’s also where funds for staffing of important agencies like the Executive Office of Energy & Environmental Affairs (EEA), which implements the bulk of the carbon emissions reduction and clean energy laws, comes from. Without adequate staff, EEA has trouble doing things like ensuring environmental protection for public lands or holding polluters accountable. It’s not uncommon for opponents of new laws to attempt to underfunded programs or agencies charged with implementing the law they dislike

Also important is the budget’s ability to shift the amount of tax collected. The former is important when considering the use of some taxes, like the gas tax, as a mechanism for not only revenue but also a way to reduce the consumption of a product that negatively impacts society.

Climate & Environment in This Year’s Budget

Most years a group of environmental organizations led by ELM and referred to as a the ‘Green Budget Coalition’ rally around the need to spend 1% of the state’s budget on the environment. This year, more attention has been directed to the budget following a controversial change Governor Baker is proposing for the use of RGGI fee revenues.

Changes to Use of RGGI Revenue: Since 2014, Massachusetts’s share of revenue from the state’s electric sector cap-and-trade program has gone primarily towards energy efficiency and conservation, with annual revenues usually totalling in the tens of millions of dollars. The bulk of that funds the popular Mass Save energy efficiency program.

The Governor’s FY2020 budget proposal seeks to change where this money can go by adding the phrase “greenhouse gas mitigation and climate change adaptation,” in the section authorizing where money can be spent. This would make the money available for things like seawall upgrades, municipal climate resiliency programs (i.e. the MVP program), and coastal conservation efforts.

According to reporting from David Abel at the Boston Globe, “Administration officials contend that the change wouldn’t come at the expense of energy-efficiency programs and would give the state more flexibility. But critics, including several prominent state senators who have been outspoken about climate change, worry that the proposal would allow the administration to shift money from what they consider to be vital efforts to cut emissions.”

The primary concern centers around a desire to keep funding for reducing emissions independent from climate adaptation funding. Based on statements from these groups, most agree that the state needs to fund both priorities, but that they should not be competing for the same pot of money.

Funding for the “Green Budget”: Currently, a little over half a penny of every dollar of the state’s operating budget goes to protecting the state’s climate and environment. In the early 2000’s, 1% of the state budget supported our environmental agencies, now it’s about 0.58%. The reason for these dismal numbers are budget cuts that originated following the Great Recession, with funding never restored to previous levels after the state’s economy rebounded.

Some agencies were hit especially hard. The MassDEP hit a staffing high point of 1,200 full-time personnel in 2009, and is currently hovering around 670 employees. According to ELM, Baker’s new proposal represents a 6% increase from the previous fiscal year. Yet this still represents just about 0.56% of the overall budget, far below how much money should be spent on the environment and climate.

Real Estate Transfer Tax: As reported on by the Boston Globe in January, Governor Baker proposed to “hike the tax on Massachusetts real estate transfers by 50 percent, and funnel the more than $1 billion it could generate in the next decade into steeling cities and towns against the effects of climate change.” The Governor was planning on including this tax hike in his budget proposal but instead filed it as a separate bill. This bill (S.10) could be wrapped into a future draft budget proposal by the House or Senate, although it’s uncertain.

Next Steps

It’s not clear what legislative leaders think about any of these budget proposals. The chief budget negotiators for each chamber (the Ways & Means Chairs) are brand new and their stance on 1% budget funding for the environment is not well known.

Also, the position of legislative leaders on shifting RGGI revenue and new climate real estate taxes are not known at this time. House Speaker DeLeo generally oppose new taxes, and may opt for an approach that utilized bond funding instead of tax increases to pay for climate change (e.g. his recent Green Works proposal).

Currently Representative Aaron Michlewitz, the House Ways & Means Chair, is working on his chamber’s response to the Governor’s budget. Expect this sometime in early May, with the Senate’s draft not far behind.

If Massachusetts is going to realize our decarbonization and environmental goals, we must not just pass ambitious climate legislation, but take the next step to fund these goals through robust budget appropriations.