Environmental issues important, but economic cost must be considered
Testimony to the New York State Senate Majority
Regarding the Climate and Community Protection Act
February 12, 2019
Testimony delivered by Greg Biryla, NFIB New York State Director
Thank you very much to Chairman Kaminsky for inviting our organization to participate today and thanks to his legislative colleagues who took time out of their busy schedules during a busy time of year to listen to many important perspectives regarding this legislation.
Your initiative in conducting public hearings on this legislation demonstrates a welcome, solutions-oriented, and inclusive approach to this important discussion about the energy future of our state.
I am Greg Biryla, New York State director for NFIB, the nation’s and the state’s leading small business advocacy association.
NFIB is a member driven organization representing close to 300,000 small businesses across this country and more than 10,000 in New York State.
NFIB members are the businesses that define our neighborhoods and imbue our communities with character and value: local hardware stores, independent restaurants, florists and barbers, roofers, landscapers and mechanics; fitness and retail boutiques. These are NFIB members.
Small businesses employ nearly half the state’s workforce, 4 million New Yorkers. When they succeed, communities succeed.
A strong, vibrant small business eco-system supports local tax bases, governments and schools. 67 cents of every dollar spent at a local small business is reinvested into the community.
I trust you all recognize and value the importance of small businesses in your home districts. It’s important to keep small businesses, and their employees in mind when considering legislation with as far reaching impacts as the Climate and Community Protection Act.
Like this bill’s sponsors, NFIB supports efforts to reduce greenhouse gas emissions, protect our environment, preserve New York’s natural assets, and responsibly transition to sustainable energy sources, but New York must also be mindful of unintended economic consequences for small businesses and consumers alike.
Small businesses depend on energy supplies at globally competitive prices to operate and run their businesses.
It should be noted that New York ratepayers pay the 8th highest electricity costs in the nation according to the US Energy Information Administration.
Small businesses rely on affordable energy options for all aspects of their business operations:
- Vehicles, transportation and shipping.
- Heating, cooling.
- Operating energy intensive equipment.
When these necessary business costs increase, small businesses are forced with a menu of bad options:
- Adjusting labor costs.
- Putting off capital investment, and
- Increasing prices.
Our members welcome energy options from every and any source as long as it is affordable and reliable.
This brings up two primary concerns regarding the Climate and Community Protection Act:
- It’s potential impact on energy costs for small businesses, and
- It’s apparent reliance on assumed future technological advancement to achieve its mandatory reductions in carbon emissions.
While a new tax is not specifically required in the bill’s language, a direct tax on carbon-based energy sources is certainly permitted if not encouraged.
The bill contemplates and considers terms and actions throughout its language that raise small businesses’ concerns that additional taxes on energy are inevitable and will lead to higher costs.
- “Market-based compliance mechanism”
- “Imposition of fees per unit of carbon dioxide”
- “Imposition of emissions caps accompanied by tradeable allowances”
A 2018 survey asked NFIB members in New York what they thought – as small business owners –about taxing carbon-based energy production, transmission, distribution and/or use in New York as a means of addressing environmental concerns:
- 87 percent opposed.
- 7 percent supported.
- 6 percent were undecided.
This is not a reflection of small business’ indifference to climate change or its commitment to addressing it, but rather that the economic impacts to those actually investing and hiring in New York’ economy must be understood and valued in coordination with environmental goals.
This is an appropriate moment to acknowledge and offer our organization’s support for language in the bill that requires the state, in its development of a “scoping plan,” to “take into account the relative contribution of sources of greenhouse gas emissions and the potential for adverse effects on small businesses and recommend a de minimis threshold below which reduction requirements will not apply.”
While appreciated, I fear this to be an acknowledgement that increases in energy costs and increased energy taxes are inherently regressive.
Regressive for individuals, communities and businesses who can least afford them.
Increased energy costs – caused by new taxes or other means of disincentivizing more cost-effective and accessible energy options – can be least afforded by individuals at the lower end of the economic scale or by businesses at the lower end of the industrial scale.
Efforts to contain the cost impacts of this bill from affecting those that can absorb it least are ambiguous. Increases in energy costs anywhere in the economy, will ultimately be felt across the economy by every employer, and felt most by the members of NFIB.
Lastly, there is the question of effectiveness. There is no technology or technologies presently at market that can be expected to cost-effectively replace carbon-based energy sources entirely in the near future.
Reshaping our state’s energy production, supply and consumption models with no reciprocation from neighboring states or global competitors creates a permanent economic disadvantage.
Mandating carbon out of New York’s energy mix is also unlikely to meaningfully reduce CO2 levels as New York’s business environment will simply force energy intensive industries and business models to jurisdictions that welcome the investment.
Again, I want to express my sincere thanks to Chairman Kaminsky and members of the legislature for attending this hearing today, inviting the perspective of small business, and welcoming discussion on one of the most important issues impacting New York State.