When spending your own money, putting limits on how it is spent seems reasonable. But when you are spending someone else’s money, budgets seem unfair and excessively restrictive. A new lawsuit from Washington State Attorney General Nick Brown (not to mention Delta House) shows that when it comes to government spending, the federal government is not allowed to do to the state what the state is doing to others.
Attorney General Brown announced his latest lawsuit against the Trump Administration, warning “The administration’s energy policies to date only threaten to make our power sources dirtier, less reliable, less efficient, and more expensive.”
The policy at issue is the decision by the federal government to cap at 10 percent the amount of federal funds that can be used to pay for administrative and staffing costs. The AG’s press release argues that the state Department of Commerce “estimates these costs are three times the cap proposed by DOE. If the new federal cap proceeds, it would force the state to scale back or delay high-impact community programs, including wildfire mitigation planning with utilities and critical energy infrastructure protection, as well an energy efficiency programs that reduce costs for businesses, utilities and local governments.”
If state legislators and the governor believe these programs are worth funding, they can use state resources to fill in the gap. If they are only willing to pay for a program with someone else’s money, that is a clear indication that the program probably isn’t very useful.
At WPC, we have pointed out that the state is spending tens of millions of dollars on government overhead that does nothing to help the environment, including tens of millions of taxpayer dollars for planning documents
In fact, legislators have budgeted state taxpayer dollars for these kinds of projects including projects to promote renewable energy. Ironically, the legislature has capped administrative costs below the level set by the Trump Administration.
For example, the state’s main climate law, the Climate Commitment Act, has a cap on administrative costs. Section 28(2) of the law says that that funding for the “administration of the requirements in this chapter” must not exceed” five percent of the total” of revenue from the CO2 tax. The state’s own climate law caps administrative costs at half the level AG Brown is suing over.
It isn’t the only example.
In the most recent capital budget adopted by the Legislature, there are also administrative cost caps on grants to cities and counties for energy retrofits for public buildings. Section 7017(4)(c) and (5)(c) both cap administrative costs at 12 percent for the Associations of Washington Cities and Washington Counties. That 12 percent is slightly higher than the Trump Administration’s cap, but not much.
Additionally, other caps in the budget are much more strict. Funding for the Conservation Commission to administer the Voluntary Riparian Grant Program is capped at four percent. The Department of Natural Resources may only take five percent of the money allocated for State Forest Land Replacement.
And while the Department of Commerce claims it must take 30 percent to run the programs funded by the federal government, the legislature capped Commerce at just three percent of the funding for Community Participatory Budgeting in the Capital Budget.
Finally, in the state operating budget, the legislature’s grant to Island County for a “pilot program to improve behavioral health outcomes” notes that “No more than 10 percent of the funds may be used for administrative costs incurred by Island county in administering the program.” A ten percent cap is fine for other jurisdictions but not for the state.
The theoretical reply is that the state programs are different and that the state needs 30 percent from the federal government to run its programs. But when the state is spending other people’s money there is no incentive to use those resources wisely.
Even if the lawsuit succeeds (I am not a lawyer, so I can’t judge the merits), the fact that the AG is attacking the federal government for doing what the state does routinely indicates there is a strong element of politics in this decision.
The AG probably believes that suing the Trump Administration is good politics. And why not? Win or lose, the taxpayers – not him – are footing the bill for the lawsuit. He gets the political bump and others pay the prices – exactly the kind of perverse incentive the federal cap is attempting to address.
