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Posts Tagged ‘Regional Greenhouse Gas Initiative’

Every year, the General Assembly finds a way to balance the budget, as they are required to do by our state constitution, or at least use accounting gimmicks to move spending around so future liabilities aren’t held against the current FY budget.

This year, the state’s “in a pickle”, so to speak, or maybe something to do with scrapple would fit better. There is a budget deficit in the neighborhood of $70 million, which increased after legislators caved to state employee demands not to pay additional expenses for their healthcare policies due to a wage freeze for most state employees, a freeze which has lasted for years. Not only did they not make this move at the request of Governor Markell, but they added $21 million to the deficit with money we don’t have to keep their constituents happy.

Meanwhile, the state wants money to pay for infrastructure spending, cleaning up the waterways, investing in startups/businesses to grow the economy, paying for increased Medicaid and public education expenses, services for the increasing number of senior citizens retiring into Delaware, and so on. As spending goes up, the state is collecting less from casino revenue and  personal and corporate income taxes than in previous years. You can see where we’re going to run into problems, and we’ve predicted for some time that the next governor of Delaware is going to have a serious fiscal mess to fix.

So what do our elected officials have in mind to balance the budget? Some new ideas include: raising state income taxes on top earners from 6.7% to 7.6%, increase Delaware’s per-gallon gas tax, motor vehicle fees, and taxes levied on wholesale fuel deliveries to fund new road and bridge improvements, increasing the gross receipts tax, reduce corporate income taxes, eliminating the estate tax, and actually cutting personal income taxes across the board.

“There’s not going to be a split of these issues that will give us the transportation money and we’ll figure this out later,” Lavelle told the News Journal. “I didn’t fall off the banana truck yesterday. I’ve been fooled more than once down there and it ain’t going to happen again.”

Did you see what was missing among these ideas? Ways to cut state spending. This is how our state does “the water dance,” similar to how many indigenous tribes around the world pray for rain; they do a symbolic dance and hope the sky will open up and rain will just fall and provide much-needed water to grass and crops so they will grow and life can continue. Replace the actual dancing with accounting “dancing” (tricks), and the rainfall with moneyfall, and otherwise the concept is the same.

Now some of this has already been done; we know the state Department of Education is about to take a big hit, as Legislators have become increasingly opposed to the Governor’s education plan, which includes Secretary Murphy. Race To The Top funds are phasing out and school district referendums continue to alternate between passing and failing, which means some districts have found themselves cutting back on spending and hiring while freezing wages for some district employees.

Yet when we see the final budget, which must be passed by June 30, where else will the state consider making cuts? Senator Lavelle went on record suggesting that tax increase were off the table unless the prevailing wage law is reformed or repealed. Will Delaware Democrats be willing to stand up to their union supporters and change the prevailing wage law?

Another way the state could make cuts is to get us out of RGGI, which is a regional cap and trade scheme. RGGI does not do anything for the environment, but it does increase our electric bills by an average of $50/year per household, and thousands more per year for most industrial businesses, who have most of the remaining few manufacturing jobs Delaware still has. Will the GA make an effort to pull us out of RGGI?

Delaware has plenty of room where cuts could be made, the only determination will be whether they make them or not. In the meantime, please visit caesarrodney.org

for the latest news and information you can use to learn about our state’s fiscal situation and click on the “Impact Delaware” link to learn more about how you can make a positive impact on Delaware.

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Division of Energy and Climate in the Department of Natural Resources and Environmental Control (DNREC)

If you missed this story, Delaware has a new “climate action plan” based on dubious data which assumes more state control of private land use will somehow save us from “man-caused climate change”. Below is our response.

For the most part, the state’s new climate plan could have been titled “Let’s Plan for the Storm of the Century”, a basically sound idea. Unfortunately, the plan also promotes a continuing un-Constitutional effort of the state to take over land use planning from the counties and municipalities. It also promotes the concept there will be catastrophic impacts from global warming which some key state leaders follow with religious like fervor. The facts show no upward trend in global average temperatures for the last eighteen years, and point to modest impacts on our environment from global warming.

Recent lawsuits have upheld local control of land use issues, as delegated by the Delaware Constitution, by over turning state attempts to write land use regulations. The state Strategic Planning Office must approve local land use plans as it relates to state funded infrastructure such as highways. Some key goals of the climate plan are directed at influencing land use planning. The office is adding a request local land use plans consider climate change, and will enforce it by weighing infrastructure investment in favor of localities that include climate considerations that conform to the state plan.

Additionally, DNREC will specifically use their excessive estimates of global warming induced sea level rise estimates and increased rainfall estimates to push for more control over storm water management (an issue already involved in a lawsuit), shoreline management, beach replenishment, and expanded tidal wetlands maps. DELDOT will use the presumption of more temperature influenced high ozone days to consider driving restrictions during air quality events. DEDO will encourage real estate agents to spread out weekly beach rentals to different start dates, an idea which has some merit but will be disruptive to the tourist industry. It should be noted all of these efforts will likely lead to higher cost for private industry.

The climate plan forecasts sea level rise from greenhouse gas induced global warming at 1.5 to 5 feet by 2100, and used three feet to develop Flood Risk Adaptation Maps which will be used for state planning purposes. Meanwhile, the report also quotes the National Oceanic & Atmospheric Administration estimates of only 1.1 feet of sea level rise by 2100, including about half that amount from localized land subsidence at the Lewes Tide Gauge, an amount roughly equal to sea level rise that occurred during the twentieth century. Most of the state is not subsiding, and land height actually increases for estuaries from deposition of sediments from upstream erosion. A realistic expectation is about six inches of sea level rise by 2100.

The plan also assumes rainfall will increase during major storms because of global warming. Even the UN climate change report admits no linkage has been confirmed between global warming and storm intensity.

The state wants to abandon the use of Federal Emergency Management Agency hundred year Flood Insurance Rate Maps which look at historic trends and current flood plain data. The complaint is these maps don’t forecast future trends. We submit the FEMA maps are updated frequently enough to be used for infrastructure planning over the likely lifespan of most infrastructure projects. The use of DNREC’s Flood Risk Adaptation Maps uses questionable forecasts and will result in un-needed additional expense for both the state and private interests. The expanded wetland maps will take a large amount of private land without compensation.

Climate change estimates will be used to force a review of electric rates by the Public Service Commission which could lead to higher rates. The Department of Health & Human Services wants to increase low-income fuel assistance even though higher average temperatures would have a net impact of lowering utility bills as much more money is spent on heating then on cooling. Every state agency has an action step in the plan to increase education of the reality and impacts of catastrophic climate change, an effort some would call propaganda.

Finally, the state has adopted a plan to reduce greenhouse gas emission by 30% by 2030 from a 2008 base year. The plan admits carbon dioxide emissions were already reduce by 25% by 2010 and so is looking for an additional 5% reduction from new initiatives by 2030. Appendix C of the plan provides the key assumptions used in developing emission forecasts. The plan used the U.S. Energy Information Agency 2009 forecast which assumed carbon dioxide emissions would increase 0.7% a year to 2030. The more recent EIA 2014 forecast assumes emissions will decrease by 0.2% a year. Based on the more recent forecast, the 30% reduction target will be met without any new initiatives needed.

The legislature, and all Delaware citizens, should question any legislation, budget, or regulatory changes driven by the “Climate Framework for Delaware”.

Dave T. Stevenson, Policy Director

Center for Energy Competitiveness

Caesar Rodney Institute

                                              

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Earlier this week Business Insider UK published an article titled, “Conservatives will hate this: Proof That Government Spending Cuts Hurt Economic Growth”. From the article:

“… austerity subtracted about 0.76 percentage points off the real growth rate of the economy between the middle of 2010 and the middle of 2011. If real government spending had remained constant at mid-2010 levels and everything else stayed constant, (yes we know these are big assumptions) the US economy would now be about 1.2 per cent larger.

There’s a secondary conclusion, too: War is good (economically), it turns out.”

They provided a graph (created by Matt Klein of the Financial Times) with data from the U.S. Bureau of Economic Analysis (BEA) “proving” that Keynesianism works. Without public spending, the author argued, our economy can’t grow.

US govt spending growth contribution detail

Enter the Foundation for Economic Freedom, whose founder Leonard Reed once published the famous short story “I, Pencil.” You absolutely should read this, by the way. An economist named Robert Murphy points out the fallacy in the calculations made for the graph above:

“Edwards (the author of the Business Times UK article) seems to think that the above chart shows at least a correlation between government spending and economic growth. After all, he wrote that the BEA chart “seems to show that government has a pretty straightforward effect on GDP.” But… the chart does nothing of the kind.

Look carefully at the legend. The various colored rectangles are different components of government spending. Specifically, the rectangles indicate how the change in each component — positive or negative — relates to the change in overall GDP. The black line is not GDP growth, but is instead the sum of the various components of government spending… if we take the BEA’s word for how much each component of government spending contributed to GDP growth in each quarter, then we can stack those numbers on top of each other and even add them up! Contrary to Edwards, the FT chart doesn’t “show” anything at all, except that the BEA each quarter announces how much various components of government spending contributed to, or subtracted from, GDP growth.

After this discussion, we can see why pretty charts from the FT showcasing government spending’s “contribution to GDP growth” quarter by quarter don’t really mean anything. It’s the same for the ex post “empirical” analyses that concluded that the Obama stimulus package “saved or created” such-and-such million jobs. The underlying models that generate these estimates assume a Keynesian world, and thus cannot test whether the Keynesian model is correct.”

Even though the government prints and issues money, it’s the private sector (both businesses and consumers) who determine the value of a good or service. The government can only run on money taken from the private sector; printing into eternity is Quantitative Easing, which causes inflation if too much is printed. So they tax or borrow it from the people. If government spending really did save economies, both Delaware and America would have people making record amounts of money instead of seeing wages stagnate. The Federal Reserve would not have to continue holding interest rates low in order to convince people to buy things like homes or cars or take out student loans.

Check out CRI’s analysis here and here.

The bottom line is, Keynesianism does not work in the real world, despite efforts by its supporters to say it does. The less the government spends, the less the government needs. Even The News Journal noted that in a recent editorial.

As we approach 2015, here’s to more free markets and less government spending at all levels.

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If you missed the recent news update about the lawsuit Dave Stevenson and CRI board member John Moore filed against DNREC and former DNREC Secretary Collin O’Mara, you can read about it here.
While the ruling by Superior Court Judge Richard Stokes means Dave et. al. can proceed with the case because they have the standing to do so (a decision we expected- the state constitution says that on matters related to the state constitution and its interpretation any Delaware citizen has standing) they still have to win the case outright. Winning the case means tossing out the decision DNREC made last November when O’Mara was the Secretary- a decision to limit the number of carbon permits allowed to be sold to “polluters” in exchange for “permission to pollute”- a decision which has netted the state over $13.3 million this year from the private sector as of October 1. Losing the case means the decision stands- and DNREC’s action to limit the number of permits allowed to be auctioned for sale will cause electric companies to pay more for “polluting”, and they in turn will pass the buck to the consumers- all of us who live and/or work in the state. We believe what DNREC did was unconstitutional, and this is why Dave is the lead plaintiff in this lawsuit. Note: CRI itself is not involved in the lawsuit.
We need your help to make sure Delaware’s carbon tax vanishes. Please click here to open a PDF attachment with a letter asking your state representative to end Delaware’s participation in our cap-and-trade tax scheme. Then, mail or e-mail the letter to your representative. They may or may not listen to CRI, but all of us together can stop state agencies from raising taxes or fees on we the people whenever they feel like it, in direct violation of the state constitution!

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