When Gov. Dannel Malloy approved the new state budget on Oct. 31, he ended a historic stalemate that left Connecticut without a spending blueprint for 123 days. But not everyone rejoiced at the budget’s signing; many balked at the raid on three of the state’s major clean-energy programs.
The bipartisan budget deal would strip $175 million from utility bill surcharges and energy initiatives over the next two fiscal years — $127 million from the Energy Efficiency Fund, $28 million from the Green Bank and $20 million from Connecticut’s Regional Greenhouse Gas Initiative. Clean energy advocates argue that these cuts threaten not only to debilitate the green energy industry but also to damage Connecticut’s long term economic well-being.
“Given the extraordinary amounts of red ink hemorrhaging from our state’s structural deficit, critical assets are jeopardized by the search for money to bridge budget gaps,” said State Rep. Lonnie Reed, D-Branford, co-chair of the energy and technology committee.
The funding cuts to the Green Bank are especially controversial because of the public dollars’ leverage on private capital. Each dollar of funding attracts eight to ten dollars’ worth of private investment to finance projects that decarbonize the atmosphere, improve energy efficiency and generate jobs. Over the six years since its inception, the Green Bank has attracted $910 million in private investments.
According to a letter signed by the Green Bank board, the transfer of funds would not only cause job loss and capital flight by private investors, but it would also “effectively end the Connecticut Green Bank.”
“The Green Bank is a sophisticated agency doing incredibly complicated work that many legislators don’t understand,” Reed said. “They don’t feel emotionally connected to its mission; in a tough economy, that’s a hard sell.”
The Green Bank’s success in recent years makes spending cuts especially devastating for advocates. The Harvard Kennedy School selected it as a national model for clean energy finance, and Congress is currently considering legislation to establish a national green bank emulating Connecticut’s model.
William Dornbos — advocacy director and senior attorney of the Acadia Center, an environmental group — predicted that cutbacks to the Energy Efficiency Fund would also be devastating, perhaps more so than those to the Green Bank. He worried that the hike in utility rates would especially burden lower income households, who already allocate 25 percent of their income to energy bills.
“It’s a real problem in Connecticut because there are so many low-income households already struggling to make ends meet,” he said. “It’s more likely that these households would be unable to make payments.”
He added that the funding cuts to the Energy Efficiency Fund would translate into 12,000 low-income families being turned away from the utility bill efficiency program.
This is not the first time that the state legislature diverted funds from clean energy institutions to trim the budget deficit. Previous raids occurred in 2003 and 2009, but this year’s cutbacks are striking because of their extent, Dornbos said. The cuts also come at a time when the state’s energy programs are linked to increasingly more sectors of the economy, touching upon the lives of more consumers, workers and entrepreneurs.
“The legislators do it because it’s there, it’s easy pickings and because they’re lazy,” said Joel Gordes, an energy consultant who served on the Energy Efficiency Fund’s board.
The legislation has spurred a rare occurrence in which environmental and consumer groups, as well as businesses unite in opposition to funding cuts. Solar Connecticut and the Home Performance Alliance of Connecticut, representing the energy industry, have expressed that they are planning to bring a lawsuit against the state.
Meanwhile, other organizations plan to fight and restore the funds at the next legislative session in February 2018, Dornbos said. He remained optimistic, saying that “legislators also understand that this is the wrong approach to plugging the hole in the state budget,” and that demonstrating widespread opposition could lead to a policy reversal.
Reed emphasized that the issue has to be tackled with a multi-pronged approach. While politicians should revisit and repurpose tax breaks and incentives, emerging energy companies must also mature their business plan since public subsidies are only a short-term solution for funding.
“Disconnected, piecemeal solutions won’t get us where we need to go,” Reed said.
The Connecticut Green Bank was established in 2011.
Nicole Ahn | email@example.com
Correction, Dec. 7: A previous version of this article said that $14 million had been cut from the Green Bank. In fact, $28 million has been cut.