States Squabble Over How To Spend Volkswagen Dirty Diesel Dollars
We have seen this movie before. After the states finally forced the tobacco companies to pony up billions of dollars to compensate for decades of bad behavior, much of the money was squandered as governments squabbled over how to spend it. In the end, much of it wound up being lumped in with general revenues to pay for things that had nothing to do with the damage done by the tobacco companies.
Now Volkswagen is ready to start paying out the nearly $3 billion it agreed to pay to the states as compensation for its diesel exhaust cheating scheme. (Note: police in Germany have just arrested a high level Porsche engineer they say was directly involved in concocting the fraud.) That means the states have to figure out what to do with it once they get their hands on the funds.
Florida Could Spend Its Share Easily
$423 million will go to California, $209 million to Texas and $127 million to New York. Another $166 million is allocated to Florida. “$166 million sounds like a lot until you realize that you could spend it all very quickly on one of the eligible actions,” Preston McLane, deputy director for air resources at the Florida Department of Environmental Protection tells the Orlando Sentinel. “When you slice the pie, it’s easy to eat it up.”
There are plenty of people who would like to help Florida spend its cash. The state has a website where members of the public can submit their ideas for who the money should be allocated. Bus manufacturers, fleet operators, and EV charging network companies are shouldering their way to the head of the line.
The city of Orlando would like to get about $20 million, money it would use to convert its free downtown public transportation system to all electric buses that cost $500,000 each. It would also like to install 150 EV chargers at a cost of $10,000 each according to Chris Castro, the city’s director of sustainability. Some of that money could also be allocated to improvements at the local airport or used to fund educational programs in its schools.
The New Hampshire Plan
New Hampshire will receive about $31 million from Volkswagen. It has just released a 21-page plan outlining how it proposes to spend the money. The public now has until June 5th to comment on the plan. About half of the money would go to replace some of the 4,300 municipal and 160 state-owned diesel-powered vehicles in the state. Much of the rest is earmarked for adding EV chargers throughout the state.
That still leaves about $11 million left over for what the Concord Monitor calls “administrative costs and project proposals from public and private entities.” If “administrative costs” sounds to you like a catch-all phrase designed to disguise nefarious dealings done behind closed doors in smoke-filled rooms, you’re probably not far from the truth.
“Together, we can take advantage of this non-taxpayer funded money to focus on issues that matter for New Hampshire: a stronger economy, a cleaner environment, and a reduced tax burden,” says governor Chris Sununu.
Minnesota Will Spend $47 Million
Minnesota has just released its plan for parceling out the money it receives from the Volkswagen settlement. The money will be spent over 10 years and will go first to replacing school buses and other heavy vehicles with electric or alternative fuel vehicles. Later phases will “take account of changing technologies and lessons learned in the first phase,” reports WCCO News in Minneapolis. Charging infrastructure in the Minneapolis/St. Paul area will be the next priority.
“The funds Minnesota is receiving through this settlement provide our state a unique opportunity to improve the quality of our air and our environment,” says governor Mark Dayton said. “I commend the Minnesota Pollution Control Agency, and its many stakeholders, for developing this comprehensive proposal.”
The New Jersey Plan
Remember how much of the money from tobacco companies went into the general treasury? The great state of New Jersey, in its infinite wisdom, thinks that is a swell idea. Consider this headline from the NJ Spotlight: STATE DIVERTS $69M FROM VW SETTLEMENT TO GENERAL FUND. To be clear, the news report indicates the $69 million is the result of a separate settlement the state made with Volkswagen. It is still getting $72 million from the federal funds available.
Still, clean air and electric vehicle advocates had hoped all of the money would be applied to emissions reduction and electric vehicle charging infrastructure. Using the money to pay this month’s bills seems like an opportunity squandered.
The state has received 116 proposals to spend the $72 million it will get from the federal settlement. Catherine McCabe, acting director of the NJ Department of Environmental Protection told lawmakers this week the priority is to select cost-effective, technically feasible projects that benefit large populations, with a focus on environmental-justice communities. She says at least 15% of the settlement money will go to fund building out the EV charging infrastructure.
And Then There Is North Carolina
You can’t dangle large amounts of money in front of politicians without sparking debate. In North Carolina, political in-fighting has been raised to the level of a contact sport. The Republican controlled legislature has gerrymandered itself into a position of dominance and is now locked into what amounts to a cage fighting match with governor Roy Cooper, a Democrat elected in 2016.
The Tar Heel state will receive $183 million in the Volkswagen settlement. While broad federal guidelines apply to how the funds can be spent, the states get to make the ultimate determination about which projects will be funded. The North Carolina legislature wants to pick the winners. The governor wants his favorites to get the money.
The Raleigh News & Observer reports a three judge panel of Superior Court justices has ruled that the legislature has the final say on spending in North Carolina, not the governor. For his part, Governor Cooper plans to appeal the ruling to the state’s Supreme Court. $183 million is enough to reward a lot of powerful friends and donors. Hopefully, some of the money will survive the political tussle and actually be put to use reducing the carbon and other emissions the people of North Carolina are forced to breathe.
The Takeaway
“All politics is local,” former House Speaker TIP O’Neill liked to say. $3 billion is a lot of cash and there will be lots of people with their hands out, anxious to grab a piece of the pie. Volkswagen is working to build EV charging infrastructure across America in a separate initiative, beginning with the installation of charging equipment at 100 Walmart stores. In the final analysis, if more than half of the money from Volkswagen goes to directly benefit ordinary citizens after the politicians get through siphoning off large chunks of change for themselves and their friends, that will probably amount to a victory for the environment.
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