Proposed DC Budget Includes Devastating Cuts and Short-Sighted Attempts to Undo Environmental Laws

Testimony of Lara Levison
Sierra Club District of Columbia Chapter
Budget Hearing on the Department of Energy and the Environment
Committee on Transportation and the Environment
Monday, April 29, 2024

Introduction

Councilmember Allen, thank you for the opportunity to testify at this budget hearing on the Department of Energy and the Environment (DOEE), and for your strong leadership on environment and sustainability issues. My name is Lara Levison, and I am the chair of the Energy Committee of the Sierra Club District of Columbia Chapter and a Ward 6 resident. The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters and a strong presence in the District.

Mayor attacks foundational clean energy and environmental initiatives

Just five months after attending the international climate negotiations in Dubai and releasing the Carbon Free DC Plan,^[1] Mayor Muriel Bower in her proposed Fiscal Year 2025 budget has launched an all-out attack on DC’s foundational programs to tackle the climate crisis and create a just transition to an economy based on clean renewable energy and local green jobs.

The mayor not only slashes funding for a wide range of climate and clean energy initiatives, but also proposes to weaken or eviscerate environmental laws put in place over the past 15 to 20 years by this council with the support of the Sierra Club and other environmental advocates. Furthermore, the mayor’s budget would devastate programs to protect and restore our rivers, wildlife, and natural places and again fails to fund initiatives enacted by the DC Council to put the District on a path to zero waste.

Healthy Homes Act

Councilmember Allen, the Sierra Club thanks you for introducing the Healthy Homes Act (B25-0119) and moving it through the legislative process, with the final vote on the bill coming up this week in the full council. As you know, this groundbreaking bill establishes a program to enable DC’s most vulnerable families to lower their utility bills and prevent indoor air pollution in their homes by transitioning from fossil fuels to clean, efficient, electric systems. The Sierra Club DC Chapter places an extremely high priority on restoring funding for the Healthy Homes Act in the FY25 budget. You will hear this priority from many of the witnesses at today’s hearing.

Raid on energy special purpose funds

Much of the damage to the District’s climate and energy equity programs, including to the Healthy Homes Act, would take place through the mayor’s raid on the special purpose funds for energy: the Sustainable Energy Trust Fund (SETF) and Renewable Energy Development Fund (REDF). The SETF is funded through a surcharge on electricity, methane gas, and home heating oil. It supports a range of energy efficiency and renewable energy programs, many of which assist low- and moderate-income residents. The SETF was increased last year to provide funding for the Healthy Homes Act.

The REDF is funded with Alternative Compliance Payments from electricity suppliers that are failing to meet the District’s requirements for electricity from renewable energy resources. Among other sustainable energy programs, the RETF funds Solar for All, which provides many low-income DC residents with the benefits of solar energy via savings on their electricity bills.

The raid on the SETF and REDF has already upended energy equity projects slated for the current fiscal year. Even though the council has not yet passed the mayor's bill to amend the 2024 budget, the DC Sustainable Energy Utility and DOEE are being forced to cancel projects already in the pipeline for Solar for All and affordable housing retrofits. Solar industry experts estimate that $4.5 million defunded from Solar for All in the current year would have provided approximately 850 low- and moderate-income households with solar energy to cut their electric bills in half for at least 15 years, for a total savings of around $9 million over 15 years. These last-minute cancellations break trust with DC residents, green businesses, and green collar workers. The Sierra Club urges the council to reject this raid on the current fiscal year budget.

Perversely, the mayor proposes to take funding away from clean energy projects and low-income families to instead pay the District government’s electricity bills–including power from dirty coal and gas plants. Rather than stealing from good energy programs to pay its energy bills, the District should increase the energy efficiency of its buildings and install more solar and geothermal facilities for its properties. The Sierra Club’s testimony at the DGS budget hearing describes how the District could use Energy Savings Performance Contracts to improve the efficiency of its buildings while avoiding large capital expenditures. 

The mayor’s proposed statutory changes to the SETF and REDF are a money-laundering gimmick that does not genuinely raise revenue but causes real harm to DC residents and businesses. Here is how the gimmick would work. Starting this year, the Department of General Services (DGS) would direct its electricity supplier to pay alternative compliance payments (ACP) for electricity obtained from non-renewable energy sources, rather than buying renewable energy credits, which on the whole cost less than the ACP. The funds from the ACP would then be siphoned from the REDF to the General Fund to be spent on a myriad of unrelated uses. DGS would be allowed to use the SETF to pay the energy supplier for its services, including the additional cost of paying the ACP instead of buying renewable energy credits.

The mayor proposes that these raids on the SETF and REDF would continue in every subsequent year. In subsequent sections of this testimony, we will continue to describe the harm caused by this maneuver. The Sierra Club urges this committee, in partnership with the Facilities Committee, to drop these statutory changes to the SETF and REDF entirely from the Budget Support Act (BSA). 

DC Sustainable Energy Utility

The mayor’s cuts in funding for the DC Sustainable Energy Utility (DCSEU) in the current year (FY24) and subsequent years are already causing the cancellation of sustainable energy projects in the pipeline, as noted above. Created by the council in 2008 and operational since 2011, the DCSEU is a cornerstone of progress on sustainable energy in the District. Operated by a contractor for DOEE, the DCSEU provides energy efficiency and renewable energy services for District residents and businesses. The reduction of $12.8 million in the DCSEU’s operating budget for FY24 forced the cancellation of proposals and projects received through the Affordable Homes Electrification Program, Solar for All program, and Affordable Housing Retrofit Accelerator. These are all programs that benefit residents who are struggling to pay their energy bills and make ends meet. Reliable funding is essential for the DCSEU to carry through on projects that have already been planned. Pulling the plug partway through the process of developing and implementing projects is a scandalous waste of taxpayer resources, not a savings. Funding for the DCSEU for the current and future years should be restored.

Local solar energy market

The mayor’s budget would destabilize DC’s local solar energy market through an amendment to the District’s Renewable Portfolio Standard (RPS). Enacted by the DC Council in 2005 and strengthened several times subsequently, the RPS currently provides strong incentives for solar energy development. The RPS requires that electricity supplied to the District of Columbia come from increasing percentages of renewable energy, ramping up to 100% in 2032. It includes a requirement that an increasing percentage of electricity must come from solar energy generated within the boundaries of the District.^[2]

Energy suppliers can comply with the solar requirement by building solar energy facilities or buying Solar Renewable Energy Credits (SRECs). Anyone in DC who owns a solar system earns one SREC for every 1000 kWh of electricity produced by a solar system. My most recent SREC sale earned me $400. The value of SRECs propels solar energy development in the District, enabling homeowners and institutions such as churches to rapidly pay for their investments in solar systems through the sale of SRECs as well as by generating electricity on our own rooftops. The value of SRECs also underpins the Solar for All program that reduces electricity bills for low-income DC residents.

The mayor’s change to the RPS is an essential component of the budget gimmick described above. Her BSA proposes to essentially exempt the DC government from the RPS. This would be done by directing the government’s supplier of electricity generated from dirty fossil fuels^[3] to stop buying renewable energy credits from solar, wind, and other renewable energy resources and instead pay the Alternative Compliance Payment. Since the DC government uses about six or seven percent of the electricity consumed in DC, there would be a significant drop in purchases of SRECs each year. The resulting increase in supply would reduce the value of SRECS, extending the payoff time for current solar owners and discouraging new solar projects.

Building Energy Performance Standards

The Sierra Club strongly opposes the mayor’s plan to significantly delay and weaken the Building Energy Performance Standards (BEPS). A legislative proposal to amend BEPS has  already been drafted, based on thoughtful discussions in the BEPS Task Force, and this bill should be considered through regular council hearings and markups. We urge the committee to drop the BEPS section from the BSA entirely. The Fiscal Impact Statement indicates that the BEPS proposals have no fiscal impact in this budget. The committee should also drop the “subject to appropriations” requirement for buildings owned by the District.

Federal funding: Inflation Reduction Act

The federal government is distributing large amounts of funding from the Inflation Reduction Act to accelerate the nation’s transition to an economy based on clean and affordable energy. The mayor’s budget is likely to hamstring DOEE’s opportunities to obtain significant funding from the federal government. The recent award to DC for Solar for All is premised on expanding DC’s current Solar for All programs, not backfilling them after budget cuts.

Green Finance Authority

The Sierra Club remains strongly in support of the Green Finance Authority’s mission to drive private investment in clean, efficient and green infrastructure projects in the District. In addition, the Green Bank’s commitment to identifying projects that advance equity considerations throughout the District has been consistent and effective. 

Our understanding is that the budget as proposed by the Mayor's Office does not anticipate any allocation of funds collected in the SETF for the Green Finance Authority (GFA) despite statutory language calling for at least $10 million to be allocated each year. The "Green Bank" is not yet capitalized to its target of $100 million in capital and therefore is still relying on increments of new capital each year when developing its project pipeline. Our understanding is that, without funding this year, the Green Bank will have to walk away from projects in its pipeline. The Sierra Club opposes a wholesale elimination of funding for the Green Bank in this or any fiscal year.

In addition to endangering these projects, this creates concerns regarding future credibility of the GFA as it attempts to work with developers and lenders in the future, who would presumably now associate political risk with the GFA's involvement in other projects. We understand that this is a difficult year for budgeting but strongly recommend that the Green Bank's allocation be handled with care for its existing project pipeline. A signal that the Green Bank funding is being tailored thoughtfully will send the market participants it interacts with to leverage private capital into green investment a very different message from a signal that Green Bank funding could simply disappear entirely to solve budgetary questions.

Coalition letters on climate and energy equity

With our recent testimony, we have submitted these coalition letters expressing opposition to the mayor’s attack on climate and energy equity programs:

• April 22 letter led by the Chesapeake Solar Energy Association
• April 24 letter led by the DC Environmental Network on climate and energy equity
• April 29 letter led by Beyond Gas DC

ZERO WASTE

Funding for zero waste measures in the District’s DOEE budget has always been modest, and largely funded through special purpose revenue (SPR) funds. The Mayor’s proposed FY25 budget and Budget Support Act of 2024 would sweep these SPR funds into the general fund in a short-sighted move that hurts people, the planet and efforts to have industry bear the costs for the full lifecycle of their products.

Failing to implement zero waste measures generates unnecessary waste that winds up in one of three places: landfills, incinerators, or dumped in the environment. Dumping occurs most frequently in Wards 5, 7, and 8, whose residents endure polluted parks, waterways, and neighborhoods. The incinerator used by the District is located in Lorton, Virginia, whose majority Black and brown residents are subject to the incinerator’s toxic emissions. And everyone is hurt by methane-belching landfills; methane is a more powerful greenhouse gas than carbon dioxide. Addressing these concerns is one of the main reasons why the District recently adopted the Zero Waste DC Plan and the Carbon Free DC Strategy, announced by the Mayor to great fanfare at COP28 in Dubai last December, as noted above. It’s also why the District previously enacted the straw and stirrer ban and utensils on request measures of the Zero Waste Omnibus Amendment Act of 2020. All would be stymied by the mayor’s proposed budget unless council acts. Acting to prevent zero waste sweeps will prevent needless harm, and ensure that the District does more than issue zero waste-related press statements or plans. The climate emergency demands more investments in zero waste measures, not cuts. 

Mayor’s proposed sweep of bag fee fund jeopardizes DOEE’s ability to enforce zero waste measures and threatens protected special purpose revenue funds

Existing zero waste measures (banning restaurants from serving single-use plastic straws and stirrers, except for persons with disabilities, and only offering utensils and other single-use items on request) are only effective if enforced. DOEE is currently able to conduct 300 restaurant inspections a year. This work, we understand, is done by 3.5 FTEs, one of which is funded through the Anacostia River CleanUp and Protection Fund, a special purpose revenue fund largely paid by bag fees. But the mayor proposes to sweep all funds from the bag fee fund. At a time when more restaurant inspectors are needed, given the number of new restaurants opening and staff churn, DOEE faces having fewer resources for this valuable work. In addition, allowing the bag fee fund to be raided imperils important educational and environmental programs, including the Anacostia trash trap program which captures countless single-use plastic bottles each year, as flagged by other organizations. The council must act to stop this sweep.

The Anacostia River CleanUp and Protection Fund is mandated by the Anacostia Protection and CleanUp Act whose language clearly states, “All funds deposited into the Fund, and any interest earned on those funds, shall not revert to the unrestricted fund balance of the General Fund of the District of Columbia at the end of the fund year or at any other time . . . .” Despite this clear legislative language seeking to protect the fund, the mayor’s proposed BSA, “authorizes the Chief Financial Officer to transfer fund balance available in special purpose, dedicated tax, and segregated Local funds to the unassigned fund balance of the General Fund for use in the proposed fiscal year 2025 through fiscal year 2028 budget and financial plan.” Does the council really wish to reverse the clear legislative language that sought to protect the bag fee fund from raiding? Do we expect customers to continue to pay the bag fee knowing that it is effectively being used as a general tax rather than for targeted programs? How can the council, passing future environmental legislation, with similarly clear protective language, have any confidence that they have done anything more than create a new tax under a different name if this sweep is allowed? We call on the council to delete the sweep of the Anacostia River Cleanup and Protection Fund from the draft BSA before approving it.  

Short-sighted sweeping of the Product Stewardship Fund threatens programs funded by polluters that save District government money

The proposed BSA would further raid $110,604 from the Product Stewardship Fund in FY24. While this may seem a relatively small amount, it is both remarkably short-sighted and, like the bag fee fund, carries significant implications for future funding of environmental programs. Effective product stewardship programs are founded on the principle that the “polluting party pays” the full costs of running the environmental program, including costs for effective government oversight. In the case of the District Product Stewardship Fund, producers of hard-to-recycle materials like paint and batteries pay administrative fees to DOEE, which uses those fees to cover its costs in overseeing the recycling program. This is in addition to the costs industry incurs in running their recycling efforts. Especially in this time of tight budgets, it’s important to create environmental programs funded by polluting industry players. We can only do that if the funds remain dedicated to the program and are protected from being swept into general funds. Just like the bag fee fund, the law that established the Product Stewardship Fund states: “The money deposited into the Fund shall not revert to unrestricted fund balance of the General Fund of the District of Columbia at the end of a fiscal year, or at any other time.” Again, the legislative intent to protect these funds could not have been clearer. Let’s not stymie future efforts to create polluter-funded environmental programs. We urge the council to delete the proposed sweep of Product Stewardship Funds from the final BSA. Without an effective hard-to-recycle product stewardship program, we will see more dumping of toxic materials, especially in disfavored communities in Wards 5, 7, and 8.   

This harmful budget requires new council action on zero waste

We should and can do so much more to meet the District’s 80 percent waste diversion goal. We understand that several small grants programs, including one to spark reuse and repair of household and other items, never made it into the Mayor’s proposed FY25 budget, just like funding for the Ditch the Disposables small grant program never made it into either the FY24 budget or the proposed FY25 budget as called for in the Zero Waste Omnibus Amendment Act of 2020. These valuable programs deserve to be funded.

Their lack of funding only increases the need for the council to do more to protect District residents from the harms of unnecessary waste. We call upon the council to introduce and adopt a strong, equitable beverage container deposit-return law. Bottle bills cut trash and dumping – including exploding numbers of plastic bottles, some of which are collected by our imperiled trash traps, increase recycling rates, create low-barrier green livelihoods and cut greenhouse gas emissions. 

We also need to adopt requirements for reusable food ware in order to prevent waste generation. As a first step, it’s time for the DC Council to introduce and adopt a measure requiring sports and entertainment venues to serve drinks in reusable cups. The average sports stadium (18,000 seats, the size of both the Capital One Arena and Audi Field) that hosts 300 events each year uses 5.4 million single-use cups and creates nearly 64 tons of plastic waste.^[4] Stadiums that serve beverages in reusable cups that are used 300 times, and then recycled, generate no waste. In addition to preventing waste, requiring reusable cups in sports and entertainment venues will generate private sector investment in reuse infrastructure, such as shared wash facilities, that can be used to grow reuse adoption by other food service entities as well as create green jobs. More reusable food ware means less waste, less illegal dumping and fewer materials sent to landfill or incineration.

Our proposal is entirely feasible. The Kennedy Center and several District music venues, such as the Atlantis, have already introduced reusable cups on a voluntary basis. The reusable cup provider serving the Atlantis also provides reusable cups to large sports stadiums in other jurisdictions like Denver. Legislation mandating the use of reusable cups in entertainment and sports stadiums would ensure that the District’s nascent adoption of reusable food ware significantly expands its footprint. The District has taken extraordinary measures to support sports stadiums this year. Isn’t it time to ask them to support our zero waste efforts?

WATER AND NATURAL PLACES

The Sierra Club strongly supports the budget recommendations in the coalition letter on natural resources, climate adaptation, and zero waste programs led by the DC Environmental Network and sent to the DC Council today. The Sierra Club has engaged on many of these programs and issues over the years. Other witnesses at this hearing will discuss these concerns in detail. The letter calls for the following:

• Fund FloodSmart Homes, air quality monitoring, and establish a CoolSmart Homes program.
• Support zero waste programs (discussed in more detail in our testimony, above).
• Restore the Anacostia River CleanUp and Protection Fund.
• Restore funds for wildlife rehabilitation services.
• Restore green infrastructure maintenance funds.
• Reverse cuts to the Watershed Protection Division.

Thank you for the opportunity to testify and for considering our views. We ask this committee and the full council to reverse the devastating budget cuts and short-sighted attempts to undo environmental laws in the mayor’s budget proposal.