Ease budget woes; close corporate charity tap

by Jennifer Hicks and Mike Tidwell

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Apr. 25, 2003

With the budget impasse in Annapolis and the failure of Gov. Robert Ehrlich's slots initiative, there's now talk of making extraordinary cuts to state services ranging from higher education to child care assistance. Times are so bad that even the most vulnerable, like the mentally retarded, could lose critical state assistance.

But what if there was a way to plug a big part of the state's $1.3 billion deficit without harming the needy and while simultaneously helping to clean our air and save the Chesapeake Bay? Sound far-fetched? It's not.

All we have to do is end the scandalous $85 million our state gives away annually to heavy-polluting, multi-billion dollar fossil fuel companies and related services. This corporate welfare, mostly in the form of tax exemptions, formally rewards and incentivizes air pollution -- and the tens of thousands of cases of lung disease that result -- while keeping millions of dollars out of state coffers that could go to educate our kids and assist poor families.

Progressive Maryland, a nonprofit organization whose mission is to advocate for working families, recently detailed these corporate giveaways in its report, "Looting the Treasury: The Best Loopholes Money Can Buy in the Maryland State Tax Code." Among other findings, the report reveals that Maryland grants its major utilities $13 million in direct tax exemptions and at least $6.8 million in tax incentives to utilities that purchase Maryland-mined coal. These highly profitable companies thus have both the ratepayer and the taxpayer to boost their bottom line while creating environmental hazards that require taxpayer-funded clean-ups later.

The biggest giveaway of all, however, is the whopping $61.6 million in tax breaks and rebates the state gives to large companies purchasing engine fuel in Maryland. Most of this goes to the cargo airline industry in the form of fuel tax exemptions.

But the full extent of such giveaways may be much worse than is known, according to Progressive Maryland. Of the 11 categories of fossil fuel tax breaks listed in the report, only eight can be accurately quantified in terms of their damage to the state budget. Three tax breaks -- favoring coal mining and fuel-delivery companies -- are set up as a permanent largesse untallied by the state. So the total welfare of this sort could be $100 million or $200 million. We won't know until we close this corporate charity tap and secure the taxes the public deserves for public services.

The double injustice here, of course, is that such tax policies encourage the use -- and waste -- of fossil fuels by keeping the price of such fuels artificially low. Coal-fired electricity plants and engine fuel combustion are two of the biggest contributors to our region's increasingly poor air quality. Indeed, Baltimore and Washington, D.C., now suffer so many summertime Code Red days that the cities are in "severe non-attainment" of the federal Clean Air Act. This could soon lead to the loss of tens of millions of dollars in federal transportation funds, further burdening Maryland taxpayers.

Tragically, ground-level ozone and particulate matter, both caused largely by coal-fired power plants, send about 180,000 Maryland residents to hospitals each year for various lung disorders. The same pollution contributes to the sky-rocketing rise in Maryland's childhood asthma cases, now more than 60,000 annually and still rising.

Finally, fossil fuel combustion produces carbon dioxide, the principle gas that scientists worldwide say is driving global warming. Left unchecked, this warming trend could soon devastate Maryland's coastal areas (due to sea-level rise) and reduce agricultural yields in Maryland between 24 and 42 percent, according to the U.S. Environmental Protection Agency. Tax favors to fossil fuel companies distort free-market forces, making it even harder for climate-safe energy sources like wind and solar power to compete.

So the message to our elected officials in Annapolis is clear: Before a single dollar is cut to higher education or handicapped citizens or needy families, the state must eliminate every penny of its $85 million-plus boondoggle handout to the polluting energy sector. Such welfare is bad for the state budget, bad for the environment, bad for the economy, bad for our health, and just plain bad for all tax-paying, hard-working Maryland families.

Jennifer Hicks and Mike Tidwell direct the Chesapeake Climate Action Network, a Takoma Park-based nonprofit dedicated to fighting global warming through clean energy.