Gambling with Tax Dollars

Recently, Lieutenant Governor Matt Denn and DEDO announced a new revolving loan fund designed to “make loans…to businesses that cannot otherwise obtain capital.”  Put in a more straightforward way, the state is going to be loaning tax dollars to businesses that cannot borrow money.

 

This raises a few elementary questions.  First, why are these targeted businesses unable to obtain capital?  The answer is simple once you understand the intent behind the new fund.  The industry at risk is that of the emerging green technology.  Businesses in this industry cannot obtain capital because they have not proven to be able to produce a profit worthy of investment.  Costs remain too high and demand is still too low.

 

If investors and lenders will not take a risk on this industry, why should Delaware taxpayers be asked to do so?  The obvious answer is that we are doing our conscientious best to position this state to be a national leader in the green movement.  This is an admirable goal; very few would argue with the benefits of energy efficiency, conservation and renewability.  One might, however, be able to debate the issue on the grounds of a cost to benefit ratio.

 

Secretary of Delaware’s Department of Natural Resources and Environmental Control, Colin O’Mara, was correct when he questioned the cost of a newly proposed power line to run in the Atlantic Ocean from New York to Virginia.  This project is being hailed by its supporters as necessary to the success of off shore energy production.  However, Secretary O’Mara correctly asked the question concerning the cost to benefit ratio in a recent News Journal article.

 

That same standard needs to be applied in this situation because tax dollars are being used to fund an industry that cannot pass a market test.  The costs are currently too high compared to the benefit.  Why are tax dollars being used to gamble on an industry that cannot survive in the marketplace?

 

In a robust and vibrant economy, this could be seen as a sensible move.  After all, the money is given in the form of a loan and not a grant.  And, ideally Delaware would be a great place to focus the emergence of the green technology industry for many reasons.

 

Unfortunately, this is anything but a robust or vibrant economy and there are hundreds of existing businesses that would benefit immensely from a little more DEDO attention; businesses that have passed the market test and are looking to expand.  At a time such as this, taxpayer dollars should be used in the most efficient and prudent manner.  All efforts should be taken to help ensure that investments be made with an expectation of a decent rate of return.

 

Let’s start helping those businesses that have survived and even grown in this weak economy.  They want to hire more people.  They want to build new buildings.  They want to invest in their communities.  They are the future of Delaware’s economy.

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Should the Feds be Buying Our Wind Power?

Energy independence has emerged as one of the leading issues as we enter the 21st Century. Delaware is positioning to be a leader in that global arena by getting out in front of alternative energy production with off-shore wind farms and many different municipalities funding solar arrays. Indeed, Delaware is one of only ten states currently under a cap and trade regulation model instituted a few years ago under the name of the Regional Greenhouse Gas Initiative (RGGI). That legislation has forged the way for a new Sustainable Energy Utility, responsible for connecting federal subsidies with alternative energy projects in the First State. In addition, Delaware recently welcomed Fisker Automotive to our dwindling family of manufacturers for production of a new model plug-in hybrid vehicle.

So many innovations…so many promises…so many unanswered questions. How realistic are the goals? How much will it cost? Is there an adequate return on our collective investment? How reliable are these alternative energy sources? How much energy supply can we ever realistically expect from wind, solar, etc.? What percentage of our actual yield will they ultimately be responsible for? What should guide our future direction; well-meaning intentions, or facts, figures and costs? Are we ready for the answers?

The Caesar Rodney Institute has determined to answer these questions, in order to help determine just how Green Delaware needs to be. To that end, CRI introduces its newest Policy Center focused on Delaware’s role on all things energy, named the Center for Energy Independence. In the Caesar Rodney Institute tradition, policy proposals, legislation and energy initiatives will be researched and analyzed in a straightforward fashion allowing the facts to lead the decisions and response.

To begin, CEI has reviewed the recent letter sent to President Obama, from both Governors Markell of Delaware and O’Malley of Maryland, asking for the Federal Government to purchase one gigawatt of wind power from this region.  Markell Letter to President Obama 7-21-10

CEI has prepared a response to that letter, authored by CRI’s Director of Public Policy, David Stevenson. Click here for a factual analysis of the governors’ proposal.  Should the Feds be Buying Our Wind Power

Shaun Fink
Executive Vice President
Caesar Rodney Institute

Should the Feds be Buying Our Wind Power

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