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.

Last week, state lawmakers continued their examination of Governor Hochul’s budget, in particular her higher education plans, by holding public hearings.  It was clear from the testimonies at the higher education hearing that there was widespread support for the proposals advanced by the governor, but that there was also broad agreement that her plan did not tackle the daunting challenges facing colleges across New York.

First the support.  Testifiers agreed that the governor’s plans to eliminate the so-called “TAP Gap,” boost funding for educational opportunity programs, childcare, and expand the state’s largest college financial aid program – the Tuition Assistance Program (TAP) – were all worthy of support.

The “TAP Gap” is the result of a decision made in the first year of the Cuomo Administration as part of the SUNY2020 plan, which allowed regular increases in public college tuition.  But that plan included a trap door.  As public college tuition went up, financial assistance from the state’s TAP stayed frozen. 

In order to ensure that the neediest students still had their tuition costs covered by the state, the State University of New York and the City University of New York campuses were required to provide that assistance from their own coffers.  As the tuition price went up and financial aid stayed frozen, more and more financial aid costs from the state treasury were placed onto the books of public colleges.  As a result, the state forced public colleges to cover the needs of the most economically needy students.  As tuition kept going up, the gap increased and increasingly added financial stress to an already-stressed system.  Last year, lawmakers agreed to phase in state support to cover the gap between tuition and financial aid.  Governor Hochul’s budget would eliminate that gap this year.

While the governor’s budget eliminates the “TAP Gap” which helps stabilize public colleges’ finances, it does little to reverse the sector’s downward financial trends that have resulted from previous Cuomo budgets and the pandemic.  The upshot is that many public and independent colleges are facing financial peril.    

For example, SUNY was seeing dramatic enrollment declines (outside of its university centers) during the pre-pandemic period.  The enrollment losses have been staggeringly large at many community colleges.  This trend preceded the pandemic, but the pandemic has accelerated the slide toward a financial abyss.  CUNY had a more stabilized enrollment until the pandemic, and now it is facing revenue gaps from significant enrollment losses.  Smaller, independent colleges have also seen enrollment declines.  Enrollment declines result in revenue shortfalls that can result in reduced services and/or workforce reductions.  Both of these outcomes make those colleges less attractive to potential students.  The less attractive the campus, the less likely students will want to attend, which triggers a continued downward spiral.

Despite massive state financial surpluses, Governor Hochul’s budget proposes little to reverse these trends.

Testimony from college administrators, faculty, and students all called for significant additional state financial assistance.  According to one analysis, in order to restore the tuition losses to SUNY, the state would have to add $500 million in support and the City University would need upwards of $200 million.  Testimony also pointed out that the state’s support for private colleges through its “Bundy Aid” program was at a high of $100 million in 1990 and has been slashed to a bit more than $35 million in the governor’s plan. 

Groups called for hundreds of millions of dollars in additional state aid in order to reverse the increasingly dire finances of many colleges.

Testimony focused on the benefits of such additional investments.  Higher education plays an important role in boosting the economy of the state.  Institutions of higher education are often regional economic engines.  State investments in higher education generate economic activity – hiring staff, spending in the community, higher incomes and tax dollars.  Yet, for years the state has underfunded higher education to earmark other, flashier economic strategies – some that succeeded and some that failed miserably, and some that failed scandalously – with prison terms for top public officials.

Investments in higher education always pay back far more.  But state investments have stagnated while student enrollments have suffered.

Of course, enrollment declines can be the result of other factors as well – changing demographics and weakening economies.  However, it was clear from the hearing that Governor Hochul’s budget is simply too limited to provide the resources necessary to turn around higher education and help lift the state’s economy.   The message was unmistakably clear: Now is the time for the state to act, and to act boldly, to restore New York’s institutions of higher education.