Ballot billions: Behind the efforts to fund and finance climate action

The recent presidential debates have put a spotlight on the climate change perspectives of President Donald Trump and former Vice President Joe Biden. While Trump has called the Paris climate accord a "disaster," Biden has vowed to reach a 100% clean energy economy by 2050.

Voters can consider these comments when casting their ballots for the next president-elect, though many Americans may not have the opportunity to vote on any particular climate efforts. Smart Cities Dive has uncovered only a handful of local climate-related ballot measures to be included on November ballots, despite many local governments participating in comprehensive efforts to increase climate mitigation.

A few cities that will present climate-related ballot measures, including Denver and Berkeley, CA, are banking on these measures to fund climate action initiatives. Others are pushing measures that could have direct climate implications, such as the Project Connect measure in Austin, TX.

These ballot-derived tax and funding measures will be crucial to support governments in a year that virtually depleted municipal and state budgets. But why haven't local climate-related measures been pushed more aggressively for this year’s Election Day — and how else can cities plan to fund and finance climate action?

Ballot measures

There is no singular resource that tracks municipal ballot measures for each election, making it difficult to know exactly how many municipal measures will focus on the environment and climate in November. Sources from Ballotpedia and Climate Mayors were only able to identify a few city-level measures with direct climate implications, and research by Smart Cities Dive drew a similar conclusion.

Despite this apparent lack of local-level action on the ballot, climate will remain a national focus and priority for many government leaders moving into 2021, especially as the U.S. recovers from the coronavirus (COVID-19) pandemic.

"The pandemic has brought into clarity a lot of the underlying issues of our community," said San Antonio Mayor Ron Nirenberg in a September Climate Mayors webinar. "We see the social determinants of health through the lens of climate action and that’s something that's been abundantly clear [amid COVID-19]."

Dana Laurent, senior strategic advisor at the Ballot Initiative Strategy Center (BISC), said climate measures are usually done on a state level where they can have more of an impact. Fifty-six statewide ballot measures on the environment were filed this year, Laurent said, but only three made it to the ballot, with just one — Nevada's Renewable Energy Standards initiative — that would have direct climate implications.

Smart Cities Dive took a look at six measures — four local, one county and one state — to assess how they would impact and fund climate-related mitigation efforts if passed next week.

Denver

Long Beach

Austin

Berkeley

Orange County

Nevada

Denver: Measure 2A

Denver voters will soon decide on ballot measure 2A, a 0.25% sales tax increase that could create up to $40 million a year to help the city adapt to climate change and reduce air pollution and greenhouse gas (GHG) emissions.

The tax would fund policies recommended by the Denver Climate Action Task force, a 26-member body representing various community groups including the local utility and environmental activists. Denver City Councilmember Jolon Clark said the task force spent seven months developing its game plan to combat climate change, and this tax would provide the necessary money to get started on that work.

The sales tax, which is excluded from items like food, water and feminine hygiene products, would fund job creation in renewable and clean energy technology; investments in solar power and battery storage; neighborhood-based environmental and climate justice programs; and resiliency efforts to help vulnerable groups prepare for climate change, among other efforts. It could help pay for the cost of weatherizing homes, putting solar panels on roofs or adding a charging station to a garage, Clark said.

Broadly, it could create long-term support for the city's efforts to tackle climate change and reduce GHG emissions 100% by 2040, particularly as the state grapples with its third driest and 12th warmest year on-record.

The measure includes a strong equity lens as well, as it would strive to reinvest 50% of all funds back into communities of color to prevent displacement and the disproportional effects of climate change on these groups, Clark said.

The measure ultimately stands to save the city about $20.2 billion dollars from the costs of climate change's effects, said Clark, who noted it's way cheaper to take action now that retroactively.

While there is some opposition to the measure from the Denver GOP, local citizens have voted in favor of environmental-related tax ballot measures before. In fact, a majority of Denver voters approved a tax in 2018 that injected the city budget with tens of millions of dollars to create more green space, according to Colorado Politics.

If the ballot doesn't pass, there are other avenues of funding the city could explore through increasing parking meter fees or charging fees for cars coming in and out of the city, according to Clark. But he said Denver would still be faced with a roughly $36 million hole to fill for climate initiatives.

Long Beach, CA: Measure US

A ballot measure in Long Beach, CA would increase the city's business license tax on oil production to potentially help fund programs in its Framework for Reconciliation — but there are doubts over its legality.

Under Measure US, the tax would increase from a maximum of 15 cents to 30 cents per barrel, paid by oil companies that conduct and manage production in the city. City Attorney Charles Parkin estimated in an impartial analysis of the measure that it would raise $1.6 million annually.

While the tax revenue would go into the city's general fund, supporters of the measure said it can be used to help pay for a variety of programs, including those that address the impact of the COVID-19 pandemic and initiatives around air, water quality and environmental justice. City Councilmember Rex Richardson said these programs will also aim to address racism as a public health crisis and enact systemic change.

"Measure US is a critical first step in improving the health and wellness of all residents, especially our Black and Brown families, who experience devastating environmental conditions and injustice," local group Yes on US said in a written argument for the measure. The group did not respond to requests for further information.

The measure has received endorsements from a slew of organizations, community leaders and elected officials, including Mayor Robert Garcia. "Climate change is the most serious threat to our future, and Measure US is a huge step forward to addressing this challenge here in Long Beach," Garcia said in a statement.

But the measure has its opponents. In a July letter, Seth Blackmon, chief counsel for the California State Lands Commission (CSLC), said the proposed tax may not be legal as it redirects revenue that should go to the state to municipal coffers without consent. Blackmon said it "violates the City's fiduciary duty to the State as trustee."

Blackmon said if the measure is not postponed, CSLC might take legal action. CSLC declined to comment further, but at the city council's July 29 meeting, Deputy City Attorney Rich Anthony said subsequent amendments have lowered the legal risk "quite a bit."

The Long Beach Area Chamber of Commerce also sent a letter in July to elected officials raising concerns about the "unintended consequences" of a tax hike. The chamber said the oil industry supports around 2,000 jobs in the city, with nearly 50% deemed "ethnically diverse" by the chamber.

Austin, TX: Proposition A

Austin, TX voters are weighing-in on a contested ballot initiative that has billions of dollars and a potential citywide transportation overhaul at stake.

The Project Connect Initial Investment measure, or Prop A, is a $7.1 billion comprehensive transit plan that would raise property taxes by 8.75 cents per $100, or about 4% annually. The transportation plan, with 20% of its funding to come from the tax increase and 45% expected to come from the Federal Transit Authority Capital Investment Grants program, would build a new rail system and downtown transit tunnel, and expand electric bus service, among other improvements.

Project Connect offers potential benefits to the local climate by offering transit alternatives to take cars off the road, experts say. Transportation is responsible for 36% of Austin and Travis County's greenhouse gas (GHG) emissions, according to the Texas Public Interest Research Group (TexPIRG), with driving-related carbon dioxide emissions increasing 178% in the metro area since 1990.

If passed, the tax measure would be the city's "largest single investment in preserving climate, Austin Mayor Steve Adler said in September. This was echoed by Austin City Councilmember Ann Kitchen, who said the measure is a "prudent approach for a huge benefit."

"Fighting back against climate change is one of the key reasons and one of the key benefits of a citywide transportation system," said Kitchen. "The cost of doing nothing, the cost of not acting is pretty significant."

Those economic costs of inaction are difficult to quantify, said TexPIRG Director Bay Scoggin in an email, though TexPIRG found the measure could reduce 109 million vehicle miles traveled annually, preventing 43,000 tons of carbon dioxide and 30 tons of nitrous oxide from being emitted in the air annually.

Significant amounts of money have been raised to support the measure. The Mobility for All Political Action Committee (PAC) raised nearly $1 million from July 24 to Sept. 24, and the city's transit agency Capital Metro spent $1.1 million on paid media to promote Prop A in the 2020 fiscal year, KVUE reports.

Not everyone is in agreement about the cost benefits of Project Connect to Austin's climate, though. Our Mobility Our Future is one anti-Prop A PAC that raised nearly $277,000 from July 24 to Sept. 24 to oppose the measure. Spokesperson Roger Falk said there "is no evidence Project Connect will have any impact on climate change," and that the city should invest in innovations like vehicle-to-everything connectivity (V2X) instead of "putting money in old technologies."

If Prop A is passed, light rail line construction is expected to take almost a decade, and ultimately service 276,000 people a day, the Austin-American Statesman reports. If the measure does not pass, some parts of the program will still be implemented, according to Capital Metro, yet it would not be able to come to fruition as planned.

Berkeley, CA: Measure HH

Voters in Berkeley, CA will decide next month on Measure HH, which would increase the city's Utility Users Tax on electricity and gas to create a climate action fund.

The ballot measure would raise the tax from 7.5% to 10% and authorize a future raise to the gas tax by another 2.5%. The first tax increase, which includes exemptions for low-income users, is estimated to raise $2.4 million annually, while the further increase on the gas tax is expected to add $730,000 a year.

City Attorney Farimah Faiz Brown's impartial analysis of the ballot measure said the money raised would be used to create a Climate Equity Action Fund, in addition to "any other funds designated by the City Council." City officials declined to comment further.

Under Measure HH, the city's Energy Commission would be renamed the Climate Action and Energy Commission and would be tasked with providing recommendations to the Berkeley City Council on how the money in the fund would be spent. Faiz Brown said it would look to "address environmental justice, climate equity issues, and the impact of climate change on the City's low income and most vulnerable populations."

Supporters of the measure said in a written argument that while the city has "made history" in its efforts to tackle greenhouse gas (GHG) emissions through its Climate Action Plan, it needs more money to fund the plan's initiatives — particularly amid the COVID-19 pandemic. Those include transitioning buildings to clean electricity, expanding cleaner transportation options and implementing energy efficiency and resiliency measures for homes and businesses.

"The pandemic and global warming are the twin crises of our lifetimes," supporters wrote. "Both have enormous economic impacts, disproportionately harm low-income and marginalized communities, and require collective action."

But the revenue raised could be spent elsewhere, to the chagrin of opponents. Faiz Brown noted that the city council has discretion to spend money in the fund on the commission's recommendations, or on "any other municipal purpose" as determined by elected officials.

In a written argument against the measure, opponents said there is not enough accountability for how the money will be spent and no guarantee that it will not be used to shore up any budget holes. "MAYBE the Council will vote to spend this tax on 'greenhouse programs' and maybe NOT. MAYBE on 'air pollution' and MAYBE NOT. Maybe for a year or two and maybe not," the argument reads.

And impacts from the raised tax rates may not be immediately realized. Faiz Brown's analysis notes that Pacific Gas and Electric (PG&E) has said it is not able to legally collect taxes on gas and electricity if they are at different rates. A PG&E spokesperson confirmed that while the measure would authorize the city to further increase the tax on gas, PG&E would be unable to collect that revenue, ultimately cutting off the city's revenue stream.

Orange County, FL: Amendment 2

Orange County residents are being asked to vote on Amendment 2, a forest land conservation charter amendment that would preserve a part of the Split Oak Forest where the Central Florida Expressway Authority is looking to construct a toll road.

The proposed road is intended to alleviate congestion, and connect the Osceola Parkway from State Road 417 to the Orlando International Airport. Yet, Amendment 2 would prevent county commissioners from using the land for anything besides conservation purposes, MyNews13.com reports.

It "seems like we're going backwards, and we're not going in the right direction," said Emily Bonilla, a member of the Orange County Board of County Commissioners, who supports the preservation measure.

The qualitative costs to the local climate for building such a toll road include increased air pollution, congestion and less tree protection. The toll road threatens a number of ecosystems, as well as the carbon sequestration that comes from natural lands to keep the air clean, said Marge Holt, the Sierra Club's conservation and political chair for Central Florida.

Opponents of the preservation measure say the roadway is a "sorely needed transportation link," the Orlando Sentinel reports. The Suburban Land Reserve and Tavistock Development Company, a nearby landowner, would donate a large portion of the land required for the $800 million road construction project. The groups would also donate 1,550 acres as compensation for the 160 acres of land harmed from the construction.

Even if the charter amendment wins a majority of votes on Election Day, it still likely won't be the end of the battle. The amendment can prevent Orange County commissioners from propping up the road's construction further, but it's unclear how much "legal teeth" the charter amendment would hold given the commissioners voted to uphold their plan for the roadways construction earlier this year.

Nevada: Question 6

Voters in Nevada will again consider a constitutional amendment requiring a state renewable energy portfolio, months after the state legislature approved similar requirements.

If passed, Question 6 would amend the Nevada State Constitution to require electric utilities to acquire 50% of their electricity from renewable resources by 2030. Between now and 2030, utilities would be required to meet a series of incremental targets to reach 50%.

The initiative garnered almost 60% of the vote in 2018, but under state law, voters must approve a constitutional amendment in two consecutive even-numbered years. Months after voters ratified the amendment the first time, a legislative solution received approval from state lawmakers.

State Sen. Chris Brooks, D, introduced Senate Bill 358 in 2019, which would require electric utilities to acquire 50% of their electricity from renewable sources by 2030. At the time, Brooks said he introduced SB358 "in the spirit" of the prior ballot initiative. The bill received unanimous approval from both the Nevada State Senate and Nevada State Assembly, and was signed into law by Gov. Steve Sisolak, D, in April 2019.

Question 6 would further prioritize this renewables requirement. Dylan Sullivan, an advisor to the Natural Resources Defense Council (NRDC) Action Fund, said that having language in the constitution means the state has a "floor, not a ceiling" on its renewable energy use.

"The way I think about Question 6 is, it's a backstop," Sullivan said. "We don't know what's going to happen in the future. But we know that we want Nevada to get more of its electricity from renewable sources like solar and geothermal. It's a backstop; it'll prevent backslide in the future."

Yet the fiscal impact of the measure is unknown, as determined by the Nevada Secretary of State in 2018.

The initiative has garnered plenty of written arguments both in support and opposition of the measure. Supporters say the amendment would reduce emissions, help the state take better advantage of solar opportunities and boost the state's economy. Meanwhile, opponents have called the amendment "unnecessary and risky," saying it would "recklessly pave a path putting ratepayers at risk by erasing Nevada's legislative ability to judiciously apply its own adjustments to our current Renewable Portfolio Standard."

The campaign has received much less financial attention in 2020 than years past. The political action committee Nevadans for Affordable, Clean Energy Choices registered in support of the measure and raised just over $3,000 as of July 15. No PAC registered in opposition, and there appears to have been little campaigning from any groups.

That is a big change from 2018, when the PAC Nevadans for a Clean Energy Future raised $10.74 million to campaign for the initiative, with the vast majority of that funding coming from NextGen Climate Action, founded by billionaire and former Democratic presidential candidate Tom Steyer.

Alternatives to fund and finance climate action

Ballot measures are "profoundly important" to support climate action, not only because they bring in direct funds, but because "they give city leaders the political license and cover they need to make these really sound investments," said Rocky Mountain Institute (RMI) senior principal Rushad Nanavatty.

Outside of ballot measures, finding the cash for climate-related projects and investments can be a challenge for governments. A recent "Innovative Climate Financing” webinar, hosted by Daring Cities, offered guidance on how cities can better understand and utilize financing models. Expert recommendations included tapping into multi-stakeholder partnerships, encouraging peer-to-peer information exchanges and testing small-scale approaches to financing to reduce risks.

There are also opportunities on the horizon in regards to federal appropriations for various city departments and sectors that could benefit from climate action, according to Nanavatty. Cities must think strategically about these spending opportunities, however, to ensure distribution impacts communities in an equitable manner, he said.

Outside of government, cities can tap opportunities to work with banks and insurance firms to harness better potential for nature-based and climate solutions, experts said in a Daring Cities webinar dubbed "Financing Greener Cities of the Future."

"Banks are coming to the party," said Tracey Cumming, technical advisor for the UNDP Biodiversity Finance Initiative (BIOFIN), during that webinar. "We're getting development banks and large investment institutions really starting to step up in this space in a way I have never seen before."

Fellow webinar speaker Kimberly Pope, community and project lead of the Nature Action Agenda at the World Economic Forum, touched on the role of insurance by noting that some climate mitigation actions, identified as "risk reduction services," can be financed through annual payments from insurance companies.

"Globally, restoration can reduce losses paid out by the insurance industry back to $20 billion annually," Pope said. She went on to say that public-private partnerships broadly have a role to play in securing cash for governments’ climate investments.

"Partnerships are often key. Mayors can't do this alone, and there’s a lot of people out there who can help them," she said.

The risks of ignoring needed investments

As challenging as it may be for governments to invest cash flow into climate mitigation, it will be exponentially more challenging to support the potentially disastrous impacts of climate change if no action is taken, experts say. This same sentiment applies to industries and regulators playing active roles in addressing climate change.

Understanding the ways climate change broadly impacts the U.S. financial system can be crucial to navigating best practices in this space. A recent report from the Climate-Related Market Risk Subcommittee of the U.S. Commodity Futures Trading Commission (CFTC) found climate change "poses complex risks for the U.S. financial system," and COVID-19 is bound to further "undermine the resilience of the financial system" to future impacts.

"[S]ystemic shocks are more likely in an environment in which financial assets do not fully reflect climate-related physical and transition risks," the report reads. "A sudden revision of market perceptions about climate risk could lead to a disorderly repricing of assets, which could in turn have cascading effects on portfolios and balance sheets and therefore systemic implications for financial stability."

Economic implications

The economic losses to extreme natural disaster events can result in fiscal ramifications on U.S. governments for years, according to the CFTC report. The authors note that the negative impacts of climate change will amount to 1.2% of annual GDP for every 1 degree Celsius increase, which is "the equivalent of wiping out nearly half of average annual GDP growth rates in recent years."

The economic risks to cities facing hurricanes, floods and other disasters are also expected to grow, according to the report. It states that if significant action is not taken, it is projected that within a decade, more than 15% of the current S&P National Municipal Bond Index by market value will be issued by cities suffering potential economic losses of 0.5%-1.0% of GDP.

This risk will likely be compounded by the limitations of "government shock absorbers" from organizations like the Federal Emergency Management Agency (FEMA), the report says. But if these mechanisms can stand the test of this growing crisis, "the financial system will be at least partially shielded from climate-related shocks."

Health implications

COVID-19 brought with it a thin silver lining of cleaner air and water globally due to reduced carbon emissions from travel and commuting. The world briefly basked in this health benefit, but after a matter of weeks, the trend began to reverse as economies reopened.

For years, climate-related coalitions including the Transportation Climate Initiative (TCI) have worked to develop policies that address health concerns derived from emissions-related challenges such as air pollution. In particular, a recent analysis conducted by the multi-university Transportation, Equity, Climate and Health (TRECH) research initiative found TCI's transportation policies could unlock $11.1 billion in air quality health benefits by 2032.

Without these types of climate-focused policies, the cost is much more significant, as dollar values are applied to lives lost, said TRECH researcher Kathy Fallon Lambert of the Harvard T.H. Chan School of Public Health. She said the lives lost the health risks of inaction on these measures would come to about $10 million, "but if you really put a dollar value on a life, what would it be?"

Increased heat is another health risk that could take the lives of an extra 1.5 million people globally by 2099, one Climate Impact Lab report found. Adaption to this heat "avoids some deaths but soaks up money and effort," the Wall Street Journal reports.

Housing and real estate implications

Climate risk plays a significant role in the real estate market as well, according to a recent Urban Land Institute report. Real estate investors are seeing increases in property insurance premiums, which can be attributed to an increased frequency in superstorms, according to the report.

Katharine Burgess, vice president of ULI's urban resilience program and co-author of this report, said it will be key for cities to work with the real estate sector in providing information and data needed to insure continued investments in their markets.

"Investors are increasingly interested in understanding this issue but are seeking better data points to not only assess the risk at this market level, but also assess resilience," Burgess said. "At the moment, it's very difficult to overlay these strategies related to resilience with the data that we have ... so with this report, we really saw a hunger for this information."

As cities' understanding and mitigation of the real estate market risk increases, "cities that proactively invest in resilience measures may become more economically attractive to real estate investors," the report reads.

Complimentary data and policy frameworks

In developing successful funding and financing models for city-level climate action, governments must adhere to frameworks that can ensure the strongest returns on these investments.

"For decades, it has been assumed that climate policy would be hard to implement because it is expensive," wrote opinion contributors David Victor and V. Ramanathan in a 2018 piece for The Hill. "While that is true — climate protection is worth the money, but not free — an equally daunting obstacle is the lack of information about how to make profoundly deep cuts in emissions."

Authors of the CFTC report shared a similar sentiment: "Addressing climate change will require policy frameworks that incentivize the fair and effective reduction of greenhouse gas emissions. In the absence of such a price, financial markets will operate suboptimally, and capital will continue to flow in the wrong direction, rather than toward accelerating the transition to a net-zero emissions economy."

Experts suggest such frameworks should be flexible to adjust to the burdens of climate change, and should give a comprehensive look at risk levels to assess needed investment. France modeled this in its recent 2021 budget bill, which is complemented for the first time with an assessment of which budgetary elements are positive, neutral or harmful for the environment. Through this analysis, the government can make more granular assessments of climate impacts as they relate to investments.

Frameworks to track private financing, however, are “generally much poorer" than the public options, said Katia Karousakis, biodiversity team leader for the OECD Environment Directorate, in the Financing Greener Cities webinar. "The fact is, we’re not tracking these private sector financial flows very well at present."

That said, the CFTC report found disclosure frameworks, most notably the Task Force on Climate-related Financial Disclosures, have been developed to "enhance the quality and comparability of corporate disclosures."

Moving ahead

The onus is on all levels of government and industrial sectors to play a role in funding and financing climate action, but cities can shine with the right resources, experts say.

"I have never been more excited about the growing awareness and the commitment and the collaboration that is happening in this space. At the same time, the urgency and the need is greater than it's ever been," said UNDP's Cumming. She encouraged local governments to harness this momentum to "create systemic change" to fundamentally avoid causing harm in where you spend your money.

Karousakis echoed Cumming's call to action, noting the importance of planning. "As cities are going to be developing, that's really one of the main entry points in making sure that [actions are] as green and as informed as possible."

Whether those actions are supported by ballot-derived tax measures, public-private partnerships or assistance from the government and other stakeholders, experts agree that the adaptive interventions taken by cities today can change the economic outlook of tomorrow.