EXCLUSIVE: Denver Climate Tax Proposal Spurred Deep Concerns, Charges Of ‘Political Grandstanding’
The second in a multi-part series.
Denver City Council’s push last year for a climate tax on electricity and natural gas was nothing more than “ill-considered political grandstanding,” according to emails from a Denver Public Health and Environment official uncovered as part of an open records request filed by Western Wire.
The emails between a key co-sponsor on Denver City Council, a city environmental official who called the proposal “ill-considered political grandstanding,” and an outside climate consulting organization with ties to the anti-fossil fuel Rockefeller Brothers Fund reveal a deep set of concerns on the speed of the process involved with the decision to take up the potential climate tax. The documents also reveal concerns about potential effects on communities within the city, and the city’s lack of outreach to businesses expected to foot the bill.
Paul Aldretti, an Environmental Public Health Analyst with Denver Public Health and Environment, wrote to Councilman Paul Kashmann, one of the co-sponsors, to express his concerns regarding the council’s climate push. In an email from July 31, 2019, Aldretti told Kashmann, “I have a really hard time with this process.”
“My experience compels me to think about this very strategically. That means having a plan that has been thoroughly considered, including strategies, impacts, costs, unintended consequences, etc. This process seems to put the cart before the horse – or more importantly, the money before the plan,” Aldretti wrote. His experience included a regional climate plan for Los Angeles, and “included potential GHG [greenhouse gas] reductions, costs, economic ROI [return on investment] (to identify those that produced economic as well as GHG reduction benefits), and other factors.”
“They were then prepared to understand exactly what funding was needed and develop specific and appropriate funding mechanisms for different aspects of the plan. The idea of coming up with a single funding strategy for a plan to be developed seems anathema to me,” Aldretti added.
But a single plan was not Aldretti’s only concern, as he noted that any taxes imposed on commercial and industrial properties would be passed to consumers anyway.
“My second point is directly related to equity. I know there has been conversation about avoiding a regressive tax on those least able to pay it. However, I don’t believe the alternative for funding has considered the potential unintended equity consequences. Consider the potential outcomes should we adopt a tax on commercial and industrial companies. The additional costs would most likely get passed on to consumers – thereby increasing costs on everyone including the most economically vulnerable populations,” Aldretti wrote.
“When considering what businesses might be most endangered by increased costs, small businesses (particularly those serving low-income communities with services and jobs) are especially vulnerable. Other businesses might just leave Denver. This not only would cost jobs but it would have a huge impact on our revenues (because of Gallagher [Amendment]). If this requires budget cuts, what communities do you think would feel it disproportionally?” Aldretti asked Kashmann.
The Gallagher Amendment, a part of Colorado’s Constitution since 1982, restructured property valuations and the way residential and non-residential properties are taxed, fixing the residential portion of the state’s property tax base at 45 percent, with non-residential property taxes at 55 percent. In Aldretti’s scenario, this means that Denver would have a difficult time making up lost tax revenues from non-residential properties, such as the commercial and industrial sectors targeted by the climate tax, as the residential portion of the tax base cannot be increased.
Aldretti reinforced his commitment to climate goals but considered Denver’s 2019 path as “ill-considered political grandstanding.”
In addition to his concerns about adding cost for businesses and low-income individuals, Aldretti expressed concern about adding to the city’s bureaucracy.
“I am completely adverse to creating another city bureaucracy that would probably spend money unnecessarily on administrative costs and lucrative contracts that could otherwise be used to the benefit of the climate and the community. I really think you need to talk to people who have done this other places and bring their knowledge to bear. I find the current process to be way too insular – there’s nothing worse than self-appointed experts!” Aldretti concluded.
“Happy to talk,” Aldretti wrote in closing.
Councilman Kashmann responded later that day.
“Paul—First off, you bet, I respect you and think you are a good man. I look forward to spending more time with you in pursuit of mutual interests,” Kashmann replied.
The councilman admitted the legislation’s timetable was sped up and likely needed correction due to the process’ quickness but rejected Aldretti’s assertion that the move was “political theater.”
“Second, I don’t disagree with much of what you say in your message. The legislation being proposed is rushed. It will be a challenge to get a final piece of legislation that is as strong as the topic deserves. I have no doubt that whatever is crafted will need some additional work 6 months down the road. However, it is not political theater in any way,” Kashmann wrote.
But climate change conversations were moved from deliberative to desperate, based on what the councilman believed was evidence for quick action.
“By waiting patiently to put something more complete before voters, we reinforce the belief that climate science is just a bunch of hysterics, and there is, in fact, time to wait. By moving with all haste, we change the narrative and emphasize that we are in a climate emergency with dire consequences,” Kashmann added. “Even if we put something on the ballot that fails in November, we have altered the debate.”
Kashmann hoped that the infusion of cash will provide “incentive shifts in behavior and energy usage,” including electric vehicles, solar and wind power, and other goals.
Later on July 31, Aldretti emailed Kashmann again.
“Unfortunately, I disagree with just about everything you said,” Aldretti replied, pointing to his beliefs that the situation was even worse than the Denver councilman thought.
“I am not advocating either patience or waiting. You can act either rationally or precipitously (as with this course). But I believe the course you are championing (which you seem to admit is reactive and not very well thought-out) sounds much more hysterical than what people currently believe to be the case. I believe this approach does more harm to the narrative than one that is more thought out. I also firmly believe that a loss in November only alters the debate negatively,” Aldretti wrote.
A ballot box failure would be difficult to recover from, Aldretti argued.
“It’s hard to be rejected by the voters and then expect to come back and say, ‘This time we have a better idea.’ And expect them to buy it. You can’t start by saying, ‘Give us your money and we’ll do something good, trust us,’” Aldretti wrote, saying the city’s failure would damage the entire agenda.
“Without a good plan, you sound like a snake-oil salesman,” Aldretti concluded.
A little over a week later, on August 8, Aldretti forward the exchange between himself and Councilman Kashmann to Scott Williamson, Program Management Officer for the Center for Climate Strategies (CCS) in Washington, D.C.
“Here is a little insight. I consider Councilman Kashmann a friend and he’s a big supporter of these bills. I think these emails will give you a sense of the thinking (or lack thereof) going into this. Because these were not official in nature, please use them for information purposes only,” Aldretti wrote.
The next day, Williamson offered his feedback to the Aldretti-Kashmann exchange as a series of bullet points, copying Tom Peterson, the Center’s founder, on the thread. Peterson served as Senior Advisor to the White House Climate Change Task Force during the Clinton Administration. CCS has received more than $1.7 million in grants from the anti-fossil fuel Rockefeller Brothers Fund since 2013, according to the philanthropy’s records.
“While a more deliberative process would probably produce stronger policy content, I doubt that content would be the basis of introduced legislation. Politics happens,” Williamson writes, counseling Aldretti not to fight the process. “My suggestion, which you are free to ignore: don’t fight/reject this initiative because of process. You have a rare point of access (a CM [councilmember] who will engage with you) which I personally would use as constructively as possible.”
As for the political aspects, Williamson told Aldretti that the “‘Tax’ should be ‘Fee’. It’s for a specific purpose, not general revenue, so it’s a fee. Good semantic politics too,” he advises. “Overall I worry about the appeal. ‘Raise energy costs $40+ million on local businesses in order to set up an office’ is a rough way to start a referendum.”
But a failure at the ballot box would be devastating, Williamson wrote.
“Failed referenda can put action back by years, and that’s a bigger danger than bad process, so the political resilience of this effort deserves optimizing, regardless of how this sausage has gotten made up to this point,” he said.
In response, Aldretti conceded to Williamson on the focus on process over content in the legislation, but insists that two of his points—the impact to communities and the effect on the business community shouldn’t be afterthoughts.
“There seems to be no contemplation of the unintended consequences – especially how this fee/tax could negatively impact the very communities it is meant to support (those communities most vulnerable to climate impacts and to economic swings). To me the impacts of this tax/fee on commercial/industrial electricity include higher costs for goods and services and potential loss of jobs,” Aldretti wrote.
One of the factors to consider in Colorado is the proportionality of tax rates that favor residential consumers over businesses.
“Because of property tax laws in Colorado, businesses pay a higher rate than residences. If business disappear, revenue is disproportionally lost, causing cutbacks that almost always seem to impact low-income communities more,” Aldretti adds.
“I am concerned the advisory group deliberately excludes representatives from the private sector. My experience has been they often have a better grasp of practical realities than the academics that would make up the membership of that group,” Aldretti wrote.
At this point, Aldretti copies the entire email exchange with Susan Aldretti, Chief of Staff for Councilwoman-At-Large Deborah Ortega. Emails to Denver City Council staff seeking clarification on the relationship between the Aldrettis were not returned by deadline.