When Growing Green Means Going Red

When it comes to “Growing Green,” Gov. Ed Rendell and the Republican-controlled Pennsylvania General Assembly believe that taxpayers should go further into the red. After spending several months promoting dueling environmental plans, the two sides agreed to place a debt proposal on the May 17 ballot that, if approved by voters, would spread $625 million of taxpayer “green” around the state.

The plan negotiated by the governor and the General Assembly would increase funding to preserve farmland, clean up hazardous sites, reclaim mines and streams, and support other environmental initiatives—but is silent on how taxpayers will pay for the borrowing needed to fund them. Its underlying premise is that state government—not the people of Pennsylvania—should have the greatest say in directing economic and environmental development in our commonwealth. And finally, it ignores policy options that could provide the same environmental improvements, while respecting private property rights and without further burdening Pennsylvania’s taxpayers.

In proposing his original “Growing Greener II” plan, Gov. Rendell argued that since Pennsylvania’s economy has changed and major job losses have taken place, the commonwealth must increase its “investment” in environmental initiatives. However, he offered little evidence to support the notion that environmental degradation has caused Pennsylvania’s economic hardships. In fact, the governor’s approach is predicated on the now-discredited Brookings Institution report, “Back to Prosperity,” that was marketing a solution in search of a problem.

A far more likely explanation for Pennsylvania’s slow economic growth is state and local government spending that has, over the past several decades, consistently exceeded the combined rates of inflation and population growth and caused job providers to leave for states with more hospitable business climates. Approving hundreds of millions of dollars in additional taxpayer debt will only accelerate that trend, as new or increased taxes or fees will almost certainly be needed to pay for it.

Much has been made of the fact that the compromise bill authorizing the referendum does not authorize “the imposition of any new tax or fee” or permit “the increase of any existing tax or fee” to repay the borrowed money. Indeed, Gov. Rendell has said that “we can pay for this without any new fees or taxes, whatsoever.” However, there is nothing in the legislation preventing state officials from approving new or increased taxes or fees at some future date—and a look at the original financing structure of both the Rendell plan and the Republicans’ alternative suggests that Pennsylvania taxpayers had better be ready to open their wallets a little wider if the referendum is passed.

For example, Gov. Rendell’s original vision for “Growing Greener II” called for new and increased waste and pollution fees on “companies.” This sounds relatively costless to Pennsylvania taxpayers—until one remembers that companies don’t really pay the costs of increased taxes and fees. They simply pass them on to their customers in the form of higher prices for products and services, and to their employees through decreased wages and benefits. And these new costs would add to the back-breaking burden Pennsylvania’s state and local governments already impose—approximately $8,213 per resident this fiscal year.

Meanwhile, the House Republicans touted their “Green PA” proposal as the fiscally responsible alternative to the governor’s plan, saying that it would not rely on new or increased taxes or fees. While this statement is technically correct, it painted an incomplete and misleading picture of how “Green PA” was to be paid for. “Green PA” called for removing the sunset provision from the recently increased waste disposal fee. Doing so would constitute a tax increase for years following the original sunset date, as consumers would continue to pay a tax that is currently set to expire.

Finally, if voters do approve the borrowing plan, they will do so without knowing which specific programs would get funding. Gov. Rendell has argued that Pennsylvanians will know “the basic programs in which the money will be spent”—but in effect, they are being asked to give the state a $625 million gift certificate.

But worst of all for Pennsylvanians, the new incarnation of “Growing Greener” ignores policy options that could improve the commonwealth’s environment without expanding the size and scope of government or increasing the taxpayers’ debt burden. For example, a much better way to lessen the “development pressure” that many farm families feel is to eliminate the state’s inheritance tax, which compels so many farmers to sell their land, rather than pass it on to future generations. Another lasting way to relieve that “pressure” is to fix the crime, tax, and educational problems that make many Pennsylvania cities inhospitable to families with children.

And at the same time, private and non-profit land conservation groups—not state or local government—should take the lead in preserving farmland. Since a large majority of Pennsylvanians do support farmland preservation, there is no reason why tax dollars could not instead remain with individuals, who could then donate the same amount to private or non-profit initiatives that accomplish the same purpose. Giving one’s own money voluntarily is the best measure of Pennsylvanians’ interest in preserving farms. Finally, if efforts to remediate environmental damage truly require taxpayer support, existing funds could be re-directed from the state’s ineffective corporate welfare programs.

The “Growing Greener” compromise suffers from the false conceit that a “greener” environment requires more “green” from the state’s already overburdened taxpayers. It’s time to eschew the same tired prescription of bigger government, and begin work on solutions that won’t put Pennsylvania’s families and businesses further into the red.

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Grant R. Gulibon is senior policy analyst with the Commonwealth Foundation, an independent public policy research and educational institute located at the foot of the Capitol in Harrisburg. Permission is hereby granted to reprint in whole or in part, provided the author and affiliation are cited.