can-new-york-afford-the-clean-water-clean-air-and-green-jobs-environmental-bond-act-of-2022

Can New York Afford the “Clean Water, Clean Air and Green Jobs Environmental Bond Act of 2022”?

On November 8, New Yorkers will be voting on Proposal 1, the $4.2 billion “Clean Water, Clean Air, and Green Jobs Environmental Bond.” This bond measure, if approved, would fund various projects concerning environmental preservation, clean water, flood control, and climate change mitigation.

A “yes” vote supports issuing these bonds.

A “no” vote opposes issuing these bonds.

 

Background

A $3 billion version of this measure was initially proposed by then-Governor Andrew Cuomo in 2019 but postponed in response to the Covid-19 induced state budget deficit. It was revived by Governor Hochul in the 2022 legislative session and expanded to $4.2 billion.

New Yorkers seem to like environmental bond acts, as all but one that made the ballot in years past were approved by voters. The most recent, however, was green-lighted 26 years ago in 1996.

It is normal for states to use bond measures to get money upfront for expensive capital projects, just as private citizens borrow to buy a car or house. And compared to previous successful environmental bond measures, the current one is a middling amount, as seen in the chart below:

 

However, even aside from the $4 billion contained in this bond measure, the New York Division of the Budget projects outstanding state-supported debt to grow by almost 42 percent in the next five years, from just under $62 billion currently to almost $88 billion in fiscal year 2027. The state has too often chosen to borrow for unnecessary spending or for expenses that could and should have been funded with pay as you go dollars. For that reason, fiscally conservative voters may have doubts about whether we can now afford this new borrowing.

 

Where Does the Money Go?

The bond act would disburse funds in four broad categories.

 

Restoration and Flood Risk Reduction: At least $1.1 Billion

This category includes protection and rehabilitation of floodplains, wetlands, streams, shorelines, forests, and wildlife habitat. It also includes flood-risk reduction projects such as raising or relocating flood-prone structures, infrastructure, and roadways, as well as altering dams, bridges and culverts to reduce flood risks. Useful properties could be bought from willing sellers.

 

Open Space Land Conservation and Recreation: Up to $650 Million

This category is primarily to preserve open space and agricultural lands. The Department of Environmental Conservation (DEC) and the Office of Parks, Recreation and Historic Preservation are authorized to purchase open land for conservation, which can include habitat for endangered and threatened species restoration as well as recreation lands. They can work with municipalities and not-for-profit organizations in purchasing open space.

DEC and the Department of Agriculture are authorized to provide grants to county agriculture and farmland protection boards, municipalities, soil and water conservation districts and not-for-profit organizations to purchase farmland preservation easements.

 

Climate Change Mitigation: Up to $1.6 Billion

This category includes multiple sub-categories, with specified amounts for each one.

A minimum of $400 million is allocated to green building projects that increase energy efficiency or the use of renewable energy in state-owned buildings, including public schools, colleges, and universities.

A minimum of $100 million is directed to climate adaptation and mitigation projects. In rural areas this can be spent on preserving open space and agricultural lands for greenhouse gas sequestration and on management of methane emissions from agriculture. In urban areas it can support efforts to reduce the urban heat island effect, including urban forestry projects, green or reflective roofs, open space protection, community gardens, and community cooling centers.

A minimum of $200 million is allocated to projects to reduce air and water pollution in disadvantaged communities.

A minimum of $500 million will go to school districts to help cover the costs of purchasing zero-emission school buses and associated infrastructure.

 

Water Quality Improvements and Resilient Infrastructure: At least $650 Million

At least $200 million of this category is to be spent on water infrastructure projects, including lead service line replacements and extending or replacing sewer lines to replace failing septic systems.

At least $250 million will go to reduce or control municipal stormwater runoff, abate algae blooms, establish riparian buffers between farm fields and streams to prevent pollutant runoff and erosion and other projects to reduce pollution discharge to waterways.

 

Environmental Justice and Labor Standards

The bond act requires that no less than 35 percent of the funds – and to the extent practicable, up to 40 percent – go to the benefit of disadvantaged communities.

The act also has a labor standards requirement that all projects funded by it shall comply with New York’s so-called prevailing wage requirements, and any public agency or municipality receiving at least $25 million must use project-labor agreements.

In addition, any structural iron or steel used in any project must be manufactured in the U.S. unless it is determined that the product is not available in sufficient quality or quantity or that doing so would result in unreasonable costs.

 

Assessment

Many of the projects called for in the Clean Water, Clean Air and Green Jobs Environmental Bond act are justifiable infrastructure investments. Investments in wetlands and coastal restoration, stormwater control, flood protection and water quality are likely to pay for themselves over time in better public health and reduced property damages.

Some of the climate change mitigation funding is to be wrapped up into the state’s Clean Green Schools Initiative, which is intended to improve air quality and energy use in public schools. Healthy environments for school children are also a reasonable use of taxpayer dollars that can pay off. Particularly, improvements in air quality can keep students healthier, which keeps them in school more and, for asthmatic children, out of the emergency room.

Other elements are of less certain value. Whether New York needs to spend on preserving more open space is not a question that can be answered definitively. As for preservation of agricultural land, if the land in question has higher valued uses, preserving it will ultimately cost more than it’s worth. That’s a policy based on the romance of the family farm rather than on a clear-eyed analysis of the public interest.

The $500 million dedicated to zero-emission school buses is a talking point for the Hochul administration, which passed legislation to require all 50,000 of the state’s school buses to be zero-emissions by 2035. But with an estimated transition cost of $10 billion, that's a mere five percent of what is needed to make the transition, leaving school districts on the hook for billions of dollars. Ironically, if the schools were just allowed to buy newer, cleaner-burning, diesel buses and transition to cleaner fuels, this amount would fund most of that transition.

Finally, the labor and materials provisions are a pure waste of taxpayer money. The prevailing wage requirements can add between 13 and 25 percent to the costs of projects, depending on what region of the state they are in, and the project-labor agreements can reduce the pool of contract bidders for projects.

The buy-American provisions prevent the purchase of lowest-cost materials, further increasing project costs, and often not even to the benefit of other New Yorkers, but to out-of-staters.

What these provisions mean is that the money allocated doesn’t go as far as it could go – less can be accomplished than if the act exempted all projects from these financially destructive requirements.

 

Conclusion

While a state shouldn’t run amok with its borrowing, occasional bonds to support large capital projects to protect and enhance both the natural and built environments are appropriate. This is especially so when they protect human health and property.

The Clean Water, Clean Air and Green Jobs Environmental Bond would fund a good number of projects that – if chosen for their economic value and not just the political influence of their sponsors – could be money well spent.

Clean water enhances human health. Stormwater and flood control protect health and property. And a healthier built environment with less air pollution, less water pollution, and a reduced urban heat island effect saves lives.

But the bond measure is less than ideal. Upwards of 10 percent of the total spending is likely to be misdirected through well-intended but ill-advised labor and materials standards, wasting a substantial portion of taxpayer money. A more cost-effective measure that stretched New Yorkers’ tax dollars further to fund more projects for the same cost would have been preferable.

And at a time of rapidly increasing state debt, taking on billions more should give us pause.

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