New York State lawmakers are moving closer to a final budget.  Both the state Senate and state Assembly have separately advanced budget plans as countermeasures to Governor Hochul’s proposed budget.  Last week, both houses began the process of harmonizing their plans in order to meet the March 31^st deadline for a final agreement.

One of the interesting debates between the houses (and the governor) focuses on the size of an environmental bond act to be placed on the ballot this November. 

Under the New York State Constitution, any direct borrowing by the state must be approved by the voters.  The Constitution states that “no debt shall be hereafter contracted …  unless such debt shall be authorized by law . . .  No such law shall take effect until it shall, at a general election … have received a majority of all the votes cast.”

For the last few years, lawmakers have debated whether to put such a proposal before the voters.  The focus of their plans has been the environment, specifically the costs the state faces from a planet that is rapidly heating due to climate change.

Last year, lawmakers agreed to a $3 billion environmental bond act and put it to a vote this November.  At that time the former governor said the bond act would “fund critical environmental restoration projects in every corner of the state to ensure New York is able to withstand the threat of more intense and frequent storms fueled by climate change.” 

Since New York will be facing billions of dollars in costs to adapt to global warming and mitigate its damage, lawmakers were correct that revenues would be needed.  Yet, the price tag for these costs will run into the billions annually and a $3 billion bond act, while helpful, is not enough. 

Recognizing that, current Governor Hochul advanced a budget plan to increase the amount of the bond act from $3 billion in borrowing to $4 billion.  Her plan closely follows last year’s and finances environmental improvements that reduce the impact of climate change by funding projects that restore habitats and reduce flood risk, improve water quality, and expand the use of renewable energy.

The Senate has advanced its own plan that would increase the bond act proposal to $6 billion.  The additional monies would fund renewable heating and cooling, weatherization of low-to-moderate income households, funds for electric school buses and transit buses, as well as the installation of bus and passenger car electric-charging infrastructure.

The Assembly landed right between the governor and senate proposals with a plan that pegs the future environmental bond act borrowing at $5 billion.  The Assembly offered a detailed proposal that earmarks revenues for energy efficiency and renewable energy projects, measures to address air and water pollution threats to low-income communities, and $450 million for climate adaptation and mitigation projects, including land acquisition and wetland protection.

There is no doubt that the funding is needed, but the state of the economy is far less certain.

Inflation and the Ukraine crisis are forcing up interest rates.  Those interest rates could have an impact of the costs of state borrowing for the bond act, impacting voters’ view of the proposal.

One way to enhance the public appeal of whatever environmental bond act is on the ballot is to make sure that it contains items that have broad support.  For example, the $450 million that the Assembly has included for land acquisition and wetlands protection would be a real boost in efforts to protect freshwater and drinking water supplies.

Another way boost public approval is to put the oil and gas companies more on the hook for covering the costs of climate change.  As mentioned earlier, the state may well need to spend more than $6 billion per year to deal with the costs of climate change.

The responsible parties for the climate crisis are the oil, gas, and coal industries.  Those industries knew for decades the dangers of global warming from the burning of fossil fuels.  Those industries spent money on a disinformation campaign to combat measures to curb greenhouses gas emissions that form the “blanket” contributing to the heating up of the earth.  And now we’re paying the price.

As state lawmakers and Governor Hochul cobble together a final budget plan, an environmental bond act is a good idea and worthy of support.  It will be far more popular when it goes before voters if it contains clear, identifiable project spending.  That plan will be even stronger if it ensures that the oil, gas, and coal industries are on the financial hook, not just taxpayers, for the looming climate catastrophe.

By now we are all feeling the rising costs of energy.  Gas is heading toward $5 per gallon, home heating costs have risen, with some using oil having their prices jump to nearly $6 per gallon.  Utility bills have soared.  President Biden argues that these hikes are a “Putin tax” – referring to Russian “mob boss” Vladimir Putin’s unprovoked aggression in Ukraine.  And while there is a lot of truth to the President’s description, it doesn’t answer one question: Who benefits from this “tax”?

When we pay taxes, we know where it goes.  Federal, state, and local governments charge taxes for the delivery of public services.  Taxes are the cost of paying for civilization.  But when it comes to the “Putin tax” that we pay at the pump, who gets it?  Clearly, it’s not the Russian leader, the US has blocked oil and gas imports from Russia.  No, those “taxes” are going to oil companies, who are seeing a surge in their already fat profits.

With oil prices pushing toward $130 a barrel last week — a stunning increase from a low of $18 a barrel just two years ago — oil and gas companies have hit the jackpot.

Exxon Mobil made $23 billion in profit for 2021.  Chevron had its most profitable year since 2014, reporting that it made $15.6 billion in revenue for 2021.  BP reported it made $12.85 billion in 2021, with $4.1 billion being made in the fourth financial quarter, the company’s largest quarterly profit since 2013.  Shell earned $19.29 billion for the year, up from $4.85 billion in 2020 with $6.4 billion in profits in the last financial quarter of 2021, its largest since 2014. 

The Ukrainian invasion is likely to swell those profits even further as energy supplies get squeezed by global sanctions on Russia.

The “Putin tax” really means Americans are forking over even more money to oil companies to fatten their profits.  And let’s not forget that the reason that the world still relies heavily on fossil fuels – and the revenues that are Putin’s source of military strength – is because the oil companies have fought tooth-and-nail to block efforts to shift the world toward renewable energy sources, including decades of lying about the dangers of global warming.  Beyond their profiteering from global crises, their actions on climate are among the worst in the history of the world.

So shouldn’t some of those profits be diverted to pay for pressing needs, including the costs of dealing with climate change?

At the national level, members of Congress have introduced legislation to enact a “windfall profits tax.”  The bill would levy a 50 percent tax on the profits oil companies earn above the price of $66 per barrel, which was the average oil price from 2015 through 2019.  The legislation then sends half the tax collections back to consumers in the form of a rebate, which the sponsors say would amount to a $240 payout to single tax filers and $360 for joint filers next year, if the price for oil remains at $120 per barrel.

Of course, the legislation would need to ensure that safeguards exist so that the oil companies simply don’t pass on the cost of the tax to consumers – thus undermining the benefits of the tax.  That’s always the problem – how to enact a tax to claw back unfair profits in a manner that makes it extremely difficult – if not impossible – to pass along the tax costs to the already-overburdened consumer.

Here in New York, there is a growing call for energy tax relief for consumers.  Depending on where you live – sales taxes differ by county – the combination of New York State and local taxes pay when they buy gas can be as high as nearly 50 cents per gallon.  Expect some sort of relief from state gas taxes this session. 

There is another approach – one that diverts oil industry profits and does so in a way that protects consumers.  Policymakers have been mulling a “Make Polluters Pay” program that would assess the largest oil companies for their contribution to greenhouse gas emissions over the past two decades, with the companies paying for their proportional share of the harm they caused.  By requiring only the largest companies to pay, market competition from their smaller competitors would keep prices low, thus making it impossible for Big Oil to pass along the costs of the assessment.  That type of approach seems like the best way to divert excess profits and to fund the costs of climate change.

As policymakers sort this out, there are things that consumers can do now to help offset the skyrocketing costs of energy. 

In the short-term, drive less, keep homes a bit cooler, and conserve more.  In the medium term, see about renewable energy options.  Solar power and geothermal power, if appropriate, can reduce reliance on fossil fuels.  Adding insulation to your home can reduce the need for expensive heating too. 

In the longer term, push lawmakers to make renewable power the clear option for the future.  Petrodollars tend to fund many of the world’s worst actors.  As long as the nation relies on oil, they literally have the world over a barrel.  Kicking the fossil fuel habit will deprive Big Oil of profits and help mitigate global climate change.  And, of course, let’s make the climate polluters pay.

This week is a big one in Albany.  Both the state Senate and Assembly will focus on the development of their respective “one House” budget plans.  These are the budget proposals advanced by the Democrat majorities that control each House.  By mid-month, it is expected that the Senate and Assembly will have passed their respective budget plans in each house and will engage in feverish negotiations with the governor to hammer out a final budget deal.

The final budget will appropriate money for the state’s expenses and also contain policy changes that are tied to those expenditures.  Those policy changes are often the most contentious and hardest to finalize since they are not only about spending, but also about permanent changes in law.

Tucked into the governor’s proposed budget was a plan to eliminate the state’s current ethics watchdog – the Joint Commission on Public Ethics (JCOPE) – and replace it with a new entity.  Governor Hochul’s promise stems from how she became governor as the result of the resignation of her predecessor.  The former governor’s resignation stemmed from allegations of abuse of authority, harassment of staff, and misuse of public resources, which followed a long history of ethical controversies and scandals in New York State.

Governor Hochul has correctly pointed out that the failures of the state ethics watchdog enabled a political culture of unaccountability.  The Commission itself has had ethical failings, with confidential votes of its own commissioners leaked back to the former governor in violation of the law. 

JCOPE has been a failure since it was first created – a failure that stemmed from its lack of political independence.  Governor Hochul is reported to have stated that she wants to “blow up JCOPE.”  Editorial pages across the state have long criticized the JCOPE and called for its replacement.

Governor Hochul advanced an ethics reform plan in her budget that – while in need of further strengthening – is an improvement over the disastrous status quo.

Yet, with only a few weeks to go until the final budget agreement, there is little evidence that change is coming.  There has been no public push from the governor to advance her own plan, and silence from the legislative branch.  Based on conversations with lawmakers, it appears that with all that is going on in the world, Albany’s political elite are hoping that ethics reform will be forgotten.

That must not happen. 

Albany’s political culture and its lack of meaningfully independent oversight creates a high risk for corruption – and that’s what New York has gotten from the Buffalo billions bid rigging scandal to the self-dealing of Sheldon Silver and Dean Skelos.  No one defends the current situation, but inaction by the governor and the Legislature to achieve change is an implicit defense of New York’s lousy ethics status quo.

It makes sense that ethics reform be in the budget – after all, replacing one agency with a new one has obvious fiscal impacts.  Further, additional funding is needed to strengthen oversight and improve the ethics commission’s IT systems that enable lobbying and financial disclosure reporting, particularly given the recent hack of JCOPE’s web servers.

Real reform historically occurs soon after a scandal, when the public’s attention is focused.  If this moment passes without action, the opportunity for meaningful change may be lost.

Over the next week and a half, the public will know if the Legislature believes in meaningful ethics reform.  Will the state Senate include an improved version of the Hochul plan in their “one House budget”?  Will the Assembly?

Whether there is or not will turn on what individual legislators demand.  Failure to include reforms, is a vote for an ethics watchdog agency that doesn’t bark or bite.

At the end of the month, whether ethics reforms are included in the state budget ultimately will hinge on what the governor wants to do.  She has the most power over the final budget agreement and it was the governor who pledged to “replace JCOPE with a new, truly independent watchdog with real teeth.”

The public should demand that Governor Hochul keeps her promise of ethics reform.  The state budget isn’t done until JCOPE is eliminated and replaced with an independent entity.

New York lawmakers return to Albany this week after the President’s Week break.  Normally state lawmakers would buckle down to hammering out a budget agreement, due by March 31^st.  The week they were gone, however, the world dramatically changed.

The criminal enterprise, known as the Russian government, has launched a war against Ukraine.  Like any mob boss, Russian leader Putin does what he thinks he can get away with.  He has ordered murders, invaded smaller neighbor nations, launched cyberattacks against other countries – including the United States – and intervened in American elections to help Donald Trump get elected and roil American society.  He has not suffered significant penalties as the result of his behavior.  Now he has initiated a major war of conquest in Europe, the first since the 1940s.

There is no way to know how this will all play out, but if stiff Ukrainian resistance leads to a Chechnyan-style response by the Russians, the violence and human suffering could spill into nearby nations, including those which are part of NATO.  It’s not impossible to imagine a widening war.

Here in New York, new issues will move to the forefront.  Already one lawmaker has called for the state to divest itself of Russian holdings.  Governor Hochul has ordered all State agencies and authorities to review and divest public funds from Russia and ramped up cyber defenses. 

But for the Legislature, higher energy prices will be a central issue.  New Yorkers were already feeling the pinch and the European war will further destabilize the situation.

Some lawmakers will push for lower prices by reducing state taxes on gasoline and oil, others will push for better mass transit systems, more electric vehicles and a swifter transition to all-electric buildings.  Given that Russia’s army is built on petrodollars, there should be enhanced steps to wean the nation – and the world – off oil and gas.

When lawmakers left during Valentine’s week, such a change in circumstance was not imagined. 

But the state budget still has to be approved and the deadline looms.  The governor and state lawmakers have a financial cushion resulting from the federal government’s pandemic relief, but that won’t last forever.  The Hochul Administration argues that it will squirrel-away enough revenues to ensure that the state doesn’t have financial problems over the next few years. 

Yet, there are significant problems that need to be addressed.  Energy costs will move to the forefront for sure, but other issues remain – for example, what will the state do to bolster its many sagging colleges and universities? 

At a time of distrust in government, however, there is more to do beyond simply getting a budget done.  The governor and state lawmakers must act in a manner that bolsters New Yorkers’ support for their own democracy.  The surprising defense and support of Putin’s corrupt regime by many Americans, most disturbingly from political leaders, underscores this need.  Those elements in apparent alliance with the Russian government will likely seek to undermine national solidarity in support of needed responses to its aggression.

The best response to tyranny abroad is to double down on democracy at home.  New York should not only respond to Putin, it must also operate in a manner that is open and accountable in order to strengthen public support.

An example: Contained within Governor Hochul’s budget are billions of dollars to be appropriated without normal government oversight.  The practices of Albany’s “bad old days” simply cannot be continued under the current (or any) circumstances.  The final budget should detail that spending and ensure that it is overseen by the state Comptroller’s office. 

Moreover, the state should boost public support of its democracy in other ways.  The governor’s budget also includes a plan to overhaul the state’s ethics oversight.  It needs more work, but it’s on the “must-do” list after ethics enforcement that was essentially controlled by the state’s political elite collapsed.  We do not have to look too far to see what happens when an administration feels no accountability to the public it is sworn to serve.

Those issues and approving the $216 billion-plus in spending all await lawmakers as they return.  The world has changed, Albany must listen and respond.

Media stories from across the state are reporting the same thing – New York’s energy prices are going up, a lot.  One ConEd customer in New York City was reported to have seen her utility bill triple in one month from $163.73 in December to a whopping $512.07 by the end of January.

She’s not alone:  Electricity prices in and around New York City are up 28.2%. 

And the problem is not limited to New York City.  For example, one New York State Senator pointed out that one Hudson Valley utility “issued an alert regarding increased energy costs stating that they are projecting that natural gas bills would increase 19%, electric bills by 46%, and combination electric and natural gas bills by 29%.”

It’s clear that all of us are feeling the pinch, but those who are struggling financially are facing the breaking point.  According to a report released by the Public Utility Law Project, nearly 1.3 million New York households were more than $1.7 billion in arrears on energy bills in December 2021, before the recent rate hikes. 

So, what happened?

First, let’s take a step back and look at your utility bill.  In general, there are three main charges to your bill — taxes and fees, the “delivery charge,” and the “supply charge.”

The delivery charge is for maintaining the system that transports the energy from where it’s generated to your home: the wires, towers, and other related infrastructure.  Your utility assesses that charge, and that financial decision is regulated by the state, through the Public Service Commission (PSC).

The supply charge, on the other hand, is not the result of a utility decision.  Utilities typically do not generate their own energy, but they are responsible for transporting it to ratepayers.  A third party generates the power and sells that energy to the consumer.  It is the supply charge that is currently on the rise. 

This winter the cost of natural gas, which is used to heat homes and generate electricity, has risen sharply.  These bill increases are being fueled by a global increase in natural gas prices due to the colder-than-normal weather driving up usage, increased economic activity, and increased international demand for natural gas.   

Of course, that could all get worse depending on the level of Russian aggression toward Ukraine.

Why does New York have this complicated system?  It’s the result of decisions made decades ago to “deregulate” energy in New York.  The selling point was that deregulation would provide competition that would limit energy costs.  It hasn’t worked out like that.  New York had some of the highest electric rates in the nation prior to deregulation and it still does now. 

New York – like much of the rest of the nation – has a complicated system that results in utility ratepayers suffering from a double whammy of increasing rates and a bewildering marketplace.  It is incredibly difficult for most New Yorkers to remain on top of the goings-on of the PSC.    The only people who can attend PSC meetings on a regular basis are most likely those whose job depends on it, i.e., industry lobbyists.   

Ironically, New York has an organization that existed to fight for ratepayers but was all-but-eliminated in the early 1990s.  In 1991, then-Governor Mario Cuomo issued Executive Order No. 141, establishing a Citizen’s Utility Board.  CUB’s purpose was to provide a seat for ratepayers in the regulatory process.  The CUB would have lawyers and economists defending ratepayers before the Public Service Commission (PSC), ensuring that their viewpoint be heard when decisions impacting millions of consumers were being made.  Over 20,000 New Yorkers quickly joined.

As an independent entity entirely reliant upon voluntary contributions, the most invaluable section of this Executive Order gave CUB access to state agency mailings.  However, in 1995, then-Governor Pataki revoked this privilege.  He claimed that since the goal of the Public Service Commission was to protect consumers, allowing CUB even this minimal privilege was unnecessary.  Since that time, CUB has been dormant.

As ratepayers face big hikes in utility rates, it is clear that New York should bring its Citizens Utility Board (CUB) out of hibernation.  Getting CUB started up will take some time, but there is no reason to wait.

Yet, what can you do to offset utility costs today?  If you’ve been hit with an astronomical electric bill, here are three example of immediate steps that you can take:

• File a complaint with your utility and with the Department of Public Service.   
• Look into state programs that may help in paying your utility bills.  Governor Hochul recently publicized a list. 
• Utilities also offer the option of setting up a payment plan that could help you pay off big price hikes more easily.   

Over the longer haul however, more aggressive ratepayer protections are needed.  And there needs to be a grizzly bear of an advocate to do it.  Now’s the time for Governor Hochul to bring CUB out of hibernation.