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Compromise Budget Fails to Restore Some $400 Million in Clean Energy Cuts

Administration and Democratic legislators agree not to reinstate funds originally slated for solar and wind power programs.

It was not much of a surprise, but the budget compromise reached between the Christie administration and Democratic legislative leadership failed to restore any of the more than $400 million in clean energy funds used to balance the current and next year’s state budget.

While disappointed by the decision, clean energy advocates are more worried the move creates a precedent that will undermine the state’s future efforts to promote energy efficiency and develop cleaner sources of electricity such as solar and wind power.

"These cuts are going to kill one of the most successful programs in the country," said Jeff Tittel, executive director of the New Jersey Sierra Club. "We’ll never get back to where we once were with up to a couple thousand solar installations in a year."

Diversion of Funds

The money was diverted by the administration largely out of three funds set up to finance clean energy projects and programs to reduce global warming. Most of the funds will be used to plug a hole in the current budget: $158 million in clean energy funds from a surcharge on customers’ gas and electric bills; $128 million from a surcharge on businesses’ utility bills; and another utility fee to help reduce greenhouse gas emissions.

The administration budget for next year also diverts an additional $50 million from the state’s clean energy fund to make up a gap in that fiscal year’s spending plan.

While some Democratic lawmakers have complained about the diversions, the expectation was leadership would go along with the cuts in clean energy funds, especially after Gov. Chris Christie told clean energy advocates they had to share in the sacrifice caused by years of bad budgetary decisions at an energy conference this spring in New Brunswick.

The most stinging criticism of the clean energy cuts have come from small solar panel installation firms and energy-efficiency businesses, which have depended on rebates and other incentives to build their business models.

Eliminating a Rebate Program

In response to the cuts, the state’s Clean Energy Office shut down a rebate program for installers, reopened it for one day until it exhausted its remaining funds, and has frozen the program until September. It also has eliminated 29 energy efficiency and renewable energy programs because of the cuts, according to a lawsuit seeking to overturn the diversion of funds.

"This sets a bad precedent," said Matt Elliott, clean energy advocate for Environment New Jersey. "These cuts are already hurting clean energy businesses in New Jersey—hundreds of them. They’ve built their businesses on the assurance the state will continue funding energy efficiency and now the rug has been pulled out from under them. For a small company, it’s just not sustainable."

The cuts also have hurt developers seeking to build combined heat power plants, facilities that produce electricity and heat simultaneously. The administration diverted $128 million out of a fund set up to help build such units, leaving their projects on uncertain grounds. Tittel and other environmentalists are worried the state may tap the clean energy fund next year to finance those projects, further reducing money available for energy efficient and renewable energy projects.

Dave Pringle, campaign director of the New Jersey Environmental Federation, said the reduction in funding will only exacerbate the state’s budgetary problems, not solve them.

We have to grow the economy. These clean energy programs are the best way to do it by creating green jobs," Pringle said. "By cutting the funds, we’re reducing a short-term deficit by expanding a long-range one."

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