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Public Citizen, Policy Center Propose New Ways to Ease State’s Money Woes: “Make Polluters Pay”

Feb. 24, 2003

Public Citizen, Policy Center Propose New Ways to Ease State’s Money Woes: “Make Polluters Pay”

Report Urges Legislature to Reduce Shortfalls With “Environmentally Responsible” Steps

AUSTIN – The cash-strapped Texas Legislature can shrink the state’s budget deficit by compelling polluters to pay their fair share toward cleanup of the state’s dirty air, according to a new report issued by Public Citizen and the Texas Center for Policy Studies.

Almost $1 billion in new state revenues could be raised over a two-year period through five measures proposed in the report, Making Polluters Pay: Environmentally Responsible Ways the 78th Legislature Can Raise New State Funds.

The report’s recommendations range from imposing new fees on use of highly polluting diesel fuels in Texas to requiring that owners of new vehicles pay annual pollution fees at registration time.

Much of the new state revenues identified in the report should be directed to the state’s air pollution reduction efforts, currently hamstrung by a lack of funding, said Tom “Smitty” Smith, director of Public Citizen’s Texas office.

“Polluters should pay their share for cleaning up the air,” Smith said. “Besides producing new state revenues, the steps recommended in our report would provide strong incentives for industry and individuals in Texas to help reduce air pollution.”

The Texas Senate Finance Committee is scheduled to hear testimony Wednesday, Feb. 26, regarding the budget for the Texas Commission on Environmental Quality.

“We hope the finance committee will give some attention to the proposals in our report for new state revenues,” Smith said.

The report also suggests that some of the new state revenues could help pay for state education and health care programs.

“When you consider the enormous health care costs that Texans and their government incur because of illnesses related to air pollution, making polluters, including consumers, pay a portion of the cost of our health system and public schools is fair and is just good economics,” said Cyrus Reed of the Texas Center for Policy Studies.

Reed said the measures proposed in the report could also help Texas’ major urban areas avoid severe economic sanctions, including loss of federal highway funds, that they currently face for failing to meet Clean Air Act standards.

The estimated annual cost (medical expenses, worker productivity, personal income) to the state as a result of air pollution ranges from $6 billion to $13 billion each year, and the loss in state revenues from air pollution alone is estimated between $157 million and $354 million each year, according to a state report.

The new report recommends that the Legislature take action during the current session to:

  • Eliminate the “volume discount” air emissions fee cap that allows the state’s largest industrial air polluters to pay the state considerably less per ton of pollutants than do smaller industries. Texas could raise $6.4 million in new revenues during the 2004-2005 biennium if it instead required all industries to pay $18 per ton for their emissions (as opposed to the current $28.63 per ton fee with a 4,000 ton emissions cap).
  • Implement a use tax on all coal, including lignite, burned in Texas. A 7.5 percent coal use tax would generate $275 million during the biennium and would require the coal industry to provide revenues to the state, just as the oil and gas industry does.
  • Charge a small annual pollution registration fee that rewards buyers of the least-polluting cars and penalizes those who buy the most-polluting vehicles. About $40 million could be raised during the biennium with such a fee.
  • Impose a 5 cent-per-gallon fee on the price of highly polluting high-sulfur diesel fuel. About $300 million could be raised during the biennium through this fee.
  • Charge a minimal electricity efficiency fee that rewards those who produce or buy power generated through cleaner technologies and penalizes those who produce or buy power from highly polluting sources. This tax would generate approximately $350 million during the biennium. (The average monthly bill increase for consumers, if they were charged instead of producers, would be only 65 cents per month, according to the report.)

Recent opinion polls show that a significant number of Texans support measures such as those proposed in the report. For example, a 2002 poll showed that 62 percent of Texans supported the institution of an annual vehicle pollution registration fee. Smith said recent polls also show that approximately 80 percent of Texans oppose using auto registration fees to clean up diesel engines, while almost half support imposing a fee on diesel fuels.

The report has been endorsed by several other Texas-based consumer and citizen organizations, including Texas Clean Water Action, the Sustainable Energy and Economic Development (SEED) Coalition, Texas Impact, the Texas Campaign for the Environment, and the Texas offices of the Sierra Club and Environmental Defense. To view the report on the Web, click here.