I have spent a lot of time writing about the basic idea of fixing schools to make them more energy efficient. Not only does it save energy, it also creates jobs, improves the health of children and teachers, and reduces climate-warming emissions.
I first wrote about Washington state Representative Hans Dunshee’s bill back in 2009, labeling the idea Green Increment Financing (paying for big capital expenditures for energy upgrades using bond financing). But on Tuesday, voters soundly rejected Referendum 52, which would have turned Dunshee’s bill into law.
I’ll admit, it’s disheartening, but there were larger forces at play in the region and beyond. The defeat doesn’t change the fact that R-52 is still a really great idea. The principle of performance contracting is just as tried and true today as they were last week.
So what happened? And what does it tell us about what’s next?
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Debt perception. Debt has become a four-letter word in our region (and the country). $500 million of new debt for energy upgrades seems like a lot to stomach, but in reality, it’s only a fraction of the debt we create for other projects (about 1.5 percent of the state’s total debt).Overall debt in Washington is going down. But the fact is that nobody out there has ever seen that much money in one place, so it seems like a lot. Debt is really an investment in stuff we need to get done, like borrowing to fix a leaky roof on a house: it makes sense today and adds value to the house in the future.
When I worked on school bond measures years ago I learned the lesson that people will support debt for things they understand, like schools. However, in the current political environment we’re going to have to encourage and highlight projects that demonstrate how borrowing for upgrades is a smart move. Clean Energy Works in Portland, the Community Energy Challenge in Bellingham, and Community Power Works in Seattle all set good examples.
School Finance Reform. I wrote a long piece earlier this year about how education financing works in our region. There are lots of people working on how to make education financing better for students and for improving educational outcomes, and energy efficiency advocates need to make common cause with them. Full funding of education is a constitutional obligation in Washington State, and the cash-strapped legislature has been falling short. Fixing this problem is made worse by the terrible economy and the rejection of Initiative 1098.
But those of us who plan to continue to work on this idea will need to do more outreach to understand education finance and add our voices to those already calling for serious reform. Making the cause of the education community our own cause will build trust and encourage them to support the idea of Referendum 52 more enthusiastically.
Energy Savings to Pay the Loan. Let’s face it; energy prices are rock-bottom in our region. The payoff for investing in energy efficiency upgrades takes patience. Until energy prices go up—making upgrades more lucrative regardless of how they are financed—borrowing money is the best way to pay for the work. While the overall payoff of an upgrade is long, all that matters for schools is that the improvements cover debt service for the life of the bond or the loan.
We need to find a way to make energy financing easier to implement on a large scale for schools, commercial buildings, and the residential sector. Amending the Washington State constitution would help with this, allowing the state to get more engaged in financing, and demonstrating to the public at large that debt isn’t necessarily a bad thing.
So we need to get back to the fight. Oregon’s returning Governor John Kitzaber has made Cool Schools a priority. If Washington didn’t get this done in 2010, Oregon could lead in 2011 and Washington can follow in the future. The need for upgrades won’t go away and neither will the benefits. Persisting on this critical effort is going to continue to be important.
The defeat of Referendum 52 taught us a lot and the rest of the region can benefit. In the long-term I am convinced that as energy costs go up, the core ideas of Referendum 52—energy efficiency upgrades that pay for themselves—will only grow stronger.