Push to Make Diversions from Clean Energy Fund Unconstitutional

Advocates disagree over whether siphoning should be shut down immediately or allowed to continue on a limited basis for five-year phase-out

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The state would stop diverting millions of dollars from the Clean Energy Fund under a constitutional amendment proposed yesterday, but the measure still would allow $420 million to be tapped for other uses during a five-year phase-out.

The proposal won backing with caveats from both environmentalists and business lobbyists who have long criticized the practice of diverting funds. In the past seven years, it has led to approximately $1.5 billion from the fund being spent on other programs, like paying utility bills at state buildings or covering salaries and maintenance at state parks.

Critics say the tactic hinders New Jersey’s efforts to reduce its dependence on fossil fuels, a goal essential to lowering pollution contributing to climate change. Others say it amounts to a hidden tax because the Clean Energy program is funded by a surcharge on customers’ gas and electric bills.

It also raises big bucks — $764 million in next year’s budget, $161million already being siphoned off by the Christie administration. They are not the first to divert funds, but certainly the most adept at doing so.

“All governors, Democrats and Republicans are thieves. They cannot help themselves,’’ said Sen. Bob Smith (D-Middlesex), the sponsor of the resolution (SCR-151). “They always raid funds.’’

The Legislature has had a hand in the thievery, as some advocates pointed out. The appropriations are included in the annual budget approved by lawmakers.

“You guys are responsible, too,’’ said Jeff Tittel, director of the New Jersey Sierra Club. Smith conceded: “There’s plenty of guilt to go around, no question.’’

There was little disagreement on that point. “Quite frankly, the Clean Energy Fund has become a slush fund,’’ said Doug O’Malley, director of Environment New Jersey.

O’Malley supported the resolution, but urged lawmakers to go cold turkey, ending diversions immediately. He said the timeline should be sped up, because even if the resolution gets put on the ballot, it could be all the way to fiscal year 2024 before lawmakers end the diversions.

Under an amendment supported by the committee, $140 million could be diverted for other uses beyond the clean energy fund in fiscal year 2019; $112 million in fiscal 2020; $84 million in fiscal 2021; $56 million in fiscal 2022; and $28 million in fiscal 2023.

Other environmentalists agreed. “The dedication of the funds should take place sooner,’’ said Tom Gilbert, campaign director for ReThink Energy NJ and the New Jersey Conservation Foundation.

The annual Clean Energy Fund runs typically in the neighborhood of $350 million, but not all of it is expended each year, resulting in carryovers to the next budget, which become a tempting pot of money for administrations to use. So far, the Clean Energy Fund is the only program financed by the surcharge on utility bills to be raided by officials.

The surcharge, dubbed the Societal Benefits Charge, also provides money for a low-income energy assistance fund; nuclear plant decommissioning; cleanup of coal gasification plants; and reimbursing utilities for uncollected bills from customers.

The proposed amendment, expected to be the subject of a hearing at the next meeting of the Senate Environment and Energy Committee, would dedicate funds for all of those programs, as well as the clean energy effort.

Sen. Richard Codey (D-Essex) questioned during the hearing whether it was a good idea to pass another constitutional amendment dedicating funds to a specific purpose. Eventually, there may be a time when an administration and lawmakers decide there is a more urgent priority for those funds, he said.

But others disagreed, saying the state is going to need to invest in clean energy programs over the long term.

“If we’re going to get serious about climate change, then we are going to need more of these funds,’’ said Ed Potosnak, of the League of Conservation Voters.