Joint Sustainability Committee voices support for climate fee proposal

Members of the city’s Joint Sustainability Committee expressed support Wednesday for a proposal to establish a climate fee to fund green initiatives.

A resolution calling on City Council to pursue a climate fee to help fill funding gaps in the Austin Climate Equity Plan received support from members at the committee’s meeting, but was not voted on because a member left during the meeting, leaving the committee without a quorum.

The resolution does not provide a specific policy proposal for a climate fee, though it states the fee should bring in “predictable revenue” and could be “paid by residents, businesses, corporations, and/or visitors.” 

Rohan Lilauwala, a project manager in the Office of Sustainability, said the status quo of identifying projects and trying to find money to fund them leaves stakeholders unhappy and is less effective. With a climate fee, he said the city can clearly establish how much it can spend on green projects and budget it in a way that makes the process more transparent.

“What we’ve been doing in the past is creating and passing plans like the Austin Climate Equity Plan with no dedicated budget and no dedicated funding plan – and that has sort of set us up for failure or, at the very least, disappointment,” Lilauwala said.

The city has not yet determined the details of how a fee would be assessed, but it is unlikely that officials will move to change the sales tax rate or implement a new tax.

“A new tax in Austin could face political and legal challenges, so there are a couple of different options that could be put into place to address those challenges,” Lilauwala said.

Lilauwala laid out two main options for how the city could establish a climate fee: increase an already existing fee – like the Clean Community Fee – by up to $3 a month, or establish what he called a “Clean Environment Fee” to fund climate initiatives like reducing carbon emissions and improving the air quality. 

The fees would be authorized by an ordinance funded in the budget, which requires approval from City Council.

“We are sort of in a holding pattern,” Lilauwala said. “The legal department needs to review the legality of anything we propose and give us options for things they believe are legal, defensible and feasible.”

He pointed to examples from other cities. Minneapolis increased its utility franchise fee to generate about $10 million a year for spending on climate projects.

A city memo from May said the Office of Sustainability is exploring a climate fee to “create annual dedicated funding for climate and environment projects.” 

Committee Member Haris Qureshi said he is concerned about the impact that increasing the sales tax or utility fees in residential neighborhoods could have on low-income Austinites. He said a tax on large retailers – like the 1 percent gross receipts tax in Portland, Oregon – would be a better way to raise funds for a climate fee.

“Something like a sales tax increase or a residential utility fee increase will negatively affect families that already have a tough time dealing with affordability in the Austin area,” he said.

City Council will vote on its budget for Fiscal Year 2025 between Aug. 14 and 16, and the process will kick off on July 12, when the city manager will present the draft budget to Council. 

Photo made available through a Creative Commons license.

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