Climate change bills: It’s not either/or

THE LEGISLATURE is currently considering two bills—one proposed by Gov. Charlie Baker, the other by House Speaker Robert DeLeo—allocating $1 billion in municipal climate change adaptation projects. Despite a shared commitment to improving resilience, the bills differ in terms of how they would go about financing adaptation. Whereas Baker’s proposal relies on a real estate transfer tax, DeLeo’s proposal uses bonds or borrowing.

As tempting as it is to pit the bills against one another, the two proposals are not mutually exclusive. On the contrary, the most effective funding solution likely involves a combination of taxing and borrowing.

The costs associated with climate change adaptation will far exceed $1 billion. A recent report by the Center for Climate Integrity estimates the state will have to spend more than $18 billion to protect its coastline against rising tides and storm surges. This number does not even begin to account for the costs associated with the myriad of other climate-related hazards impacting inland communities, such as heat waves, drought, forest fires, and others. In turn, environmental advocates have called for an “all-hands-on-deck” approach to financing that includes a mix of taxes, bonds, and, if possible, private capital.

Diversifying funding streams provides greater flexibility to address short and long term adaptation goals. On the one hand, bond money can be quickly distributed to municipalities hoping to launch new and potentially costly projects. The urgency to act on climate is now. A competitive grant program funded through bonds will help cash-strapped municipalities get the funding they so desperately need to begin addressing existing vulnerabilities.

On the other hand, a transfer tax is well suited to support long term investments in projects spanning multiple years. It has the added benefit of longevity since the tax will continue to generate revenue long after the bond has expired. That said, one would expect a lag between the creation of a new tax and the availability of funds. The Department of Revenue anticipates the bill will generate $75 million in excise revenue in fiscal year 2020 and roughly $137 million on an ongoing annual basis. This timeline seems ambitious given that the real estate industry is already fighting tooth and nail to block the tax and will likely work to slow the bill’s implementation. Nor is it outside the realm of possibility to imagine a scenario where municipal funding demands exceed the revenue projections. Bond money can help offset these potential shortfalls.

These are just first step financing mechanisms designed to address the impacts of climate change on the Commonwealth. Although we in Massachusetts do not deny that climate change is real, we cannot delude ourselves into thinking that living with it will be cheap. Creating a multifaceted funding program will go a long way toward to ensuring our cities and towns remain resilient in the face of a host of climate-related hazards.

Rob A. DeLeo is an associate professor of public policy at Bentley University. He is the son of House Speaker Robert DeLeo.