The Funding Game of Climate Action: The Financing Logic Behind U.S. Local Referendums

In recent U.S. presidential campaign debates, the climate stances of Donald Trump and Joe Biden have taken center stage. Trump has called the Paris Climate Agreement a "disaster," while Biden has pledged to achieve a 100% clean energy economy by 2050. However, most American voters may not have the opportunity to directly weigh in on climate issues when they cast their ballots in November. According to a Smart Cities Dive survey, although many local governments are advancing comprehensive climate mitigation efforts, there are few local ballot measures directly related to climate on the November ballot.

A few cities, such as Denver, Colorado, and Berkeley, California, are betting on these ballot measures to fund climate action. Other cities are advancing measures that could have direct climate impacts, such as Austin, Texas's "Project Connect" transit ballot measure. In a year when the COVID-19 pandemic has nearly exhausted state and city budgets, these tax and financing measures passed through ballot initiatives are crucial for government support. But why haven't local climate-related measures been more actively promoted on Election Day this year? What other avenues do cities have to finance climate action?

Overview of Ballot Measures

There is currently no unified resource tracking municipal ballot measures for each election, making it difficult to precisely count the number of municipal measures related to the environment and climate in November. Sources from Ballotpedia and Climate Mayors can only identify a few city-level measures with direct climate impacts, and Smart Cities Dive's research has reached similar conclusions. Despite seemingly insufficient ballot action at the local level, climate will remain a national focus for many government leaders in 2021, especially as the U.S. recovers from the COVID-19 pandemic.

San Antonio Mayor Ron Nirenberg said during a September Climate Mayors webinar: "The pandemic has revealed many fundamental issues in our communities. We see the social determinants of health through the lens of climate action, which has been especially evident during COVID-19." Dana Laurent, senior strategic advisor at the Ballot Initiative Strategy Center, noted that climate measures are typically pursued at the state level, where they have greater impact. This year, 56 statewide environmental ballot measures were submitted, but only 3 made it onto the ballot, and only Nevada's renewable energy standard initiative has a direct climate impact.

Smart Cities Dive examined six measures—four local, one county, one state—to assess how they would impact and fund climate mitigation efforts if passed next week.

Denver: Ballot Measure 2A

Denver voters will decide on Ballot Measure 2A, a 0.25% sales tax increase that could generate up to $40 million annually to help the city adapt to climate change and reduce air pollution and greenhouse gas emissions. The tax would fund policies recommended by Denver's Climate Action Task Force, a 26-member group representing a diverse range of community organizations, including local utilities and environmental activists. Denver City Councilmember Jolon Clark said the task force spent seven months developing an action plan to address climate change, and this tax would provide the necessary funding to launch the effort. The sales tax, which excludes items such as food, water, and feminine hygiene products, would fund job creation in renewable and clean energy technologies, investments in solar and battery storage, community environmental and climate justice projects, and resilience building to help vulnerable populations cope with climate change. Clark said it could also be used to pay for home insulation, rooftop solar panels, or garage charging station installations. Broadly, the measure could provide long-term support for the city's goal of reducing greenhouse gas emissions by 100% by 2040, especially as the state experiences its third-driest and twelfth-warmest year on record. The measure includes a strong equity focus, aiming to reinvest 50% of funds into communities of color to prevent displacement and the disproportionate impacts of climate change on these groups. Clark said the measure could ultimately save the city approximately $20.2 billion in climate change impact costs, noting that acting now is much cheaper than fixing problems later. Despite opposition from Denver Republicans, local voters have previously supported environmental tax ballot measures. According to Colorado Politics, a majority of Denver voters approved a tax in 2018 that injected tens of millions of dollars into the city budget for increasing green spaces. If the ballot measure fails, Clark said the city could explore financing options such as increasing parking meter fees or charging vehicles entering and leaving the city, but Denver's climate initiative would still face a funding gap of approximately $36 million.

Long Beach (CA): Measure US

Long Beach's ballot measure would increase the business license tax on oil production, potentially funding its "Settlement Framework" project, but its legality is questionable. Under Measure US, the tax cap per barrel of oil would rise from 15 cents to 30 cents, paid by oil companies that conduct and manage production in the city. City Prosecutor Charles Parkin estimated in an impartial analysis that the measure could raise $1.6 million annually. Tax revenue would go into the city's general fund, which supporters say could fund various programs, including responses to COVID-19 impacts and air, water quality, and environmental justice initiatives. Councilmember Rex Richardson said these programs would also aim to address "racism as a public health crisis" and drive systemic change. In written arguments, local organization Yes on US stated: "Measure US is a critical first step toward improving the health and well-being of all residents, especially Black and Brown families who suffer from severe environmental conditions and injustices." The measure has support from numerous organizations, community leaders, and elected officials, including Mayor Robert Garcia. But opponents include Seth Blackmon, chief counsel for the California State Lands Commission, who said in a July letter that the tax may not be legal because it diverts revenue that should belong to the state to the city treasury without consent, violating the city's fiduciary duty as a trustee to the state. Blackmon said the commission could take legal action if the measure is not postponed. The Long Beach Area Chamber of Commerce also wrote a letter expressing concerns about the "unintended consequences" of the tax increase, stating that the oil industry supports approximately 2,000 jobs in the city, nearly 50% of which the chamber considers "ethnically diverse."

Austin (TX): Proposition A

Austin voters are weighing a controversial ballot measure involving billions of dollars and potentially citywide transit reform. The "Project Connect Initial Investment" measure (Prop A) is a $7.1 billion comprehensive transit plan that would raise the property tax rate by 8.75 cents per $100, approximately 4% annually. The plan is funded 20% by the tax increase, with 45% expected from the Federal Transit Administration's Capital Investment Grants program, and would build a new rail system and downtown transit tunnel, as well as expand electric bus service, among other things. Experts say Project Connect has potential climate benefits for the local area by providing transit alternatives that reduce cars on the road. According to data from TexPIRG, transportation accounts for 36% of greenhouse gas emissions in Austin and Travis County, and driving-related CO2 emissions in the metro area have increased 178% since 1990. Austin Mayor Steve Adler said in September that, if passed, the tax measure would be the city's "largest single investment in protecting the climate." Councilmember Ann Kitchen called it a "prudent approach with enormous benefits." Bay Scoggin, director of TexPIRG, said via email that the economic cost of inaction is difficult to quantify, but TexPIRG found the measure could reduce vehicle miles traveled by 109 million annually, preventing 43,000 tons of CO2 and 30 tons of nitrous oxide emissions. Funding supporting the measure has been substantial, with the Mobility for All political action committee raising nearly $1 million between July 24 and September 24, and the city's transit agency Capital Metro spending $1.1 million on paid media promoting Prop A in fiscal year 2020. Opponent Our Mobility Our Future, an anti-Prop A PAC, raised nearly $277,000 during the same period. Spokesperson Roger Falk said "there is no evidence that Project Connect would have any impact on climate," and the city should invest in innovations like vehicle-to-everything connectivity rather than "putting money into old technology." If Prop A passes, light rail construction is expected to take nearly a decade, ultimately serving 276,000 people daily. If it fails, Capital Metro says some projects would still be implemented, but not as planned.

Berkeley (CA): Measure HH

Berkeley voters will decide on Measure HH, which would increase the utility user tax on electricity and gas to establish a climate action fund. The measure would raise the tax rate from 7.5% to 10% and authorize an additional 2.5% increase on gas taxes in the future. The first tax increase (with exemptions for low-income users) is expected to raise $2.4 million annually, and the further gas tax increase is expected to add $730,000 annually. According to an impartial analysis by City Prosecutor Farimah Faiz Brown, the funds raised would be used to establish a Climate Equity Action Fund, as well as "any other funds designated by the city council." City officials declined further comment. Under Measure HH, the city's Energy Commission would be renamed the Climate Action and Energy Commission, responsible for advising the city council on fund allocation. Faiz Brown said it would focus on "addressing environmental justice, climate equity issues, and the impacts of climate change on the city's low-income and most vulnerable populations." Supporters argue in written statements that, although the city has been "making history" in reducing emissions through its Climate Action Plan, more funding is needed to support planned projects, especially during the pandemic. Projects include transitioning buildings to clean electricity, expanding clean transportation options, and implementing energy efficiency and resilience measures for homes and businesses. Supporters wrote: "The pandemic and global warming are the twin crises of our generation. Both have enormous economic impacts, disproportionately harm low-income and marginalized communities, and require collective action." But opponents worry that funds raised could be diverted for other uses. Faiz Brown noted that the city council has the authority to use funds for commission recommendations or "any other municipal purpose." Opponents argue in written statements that there is a lack of accountability in fund use, with no guarantee that funds won't be used to fill budget gaps. Additionally, the impact of the tax increase may not be immediately realized. Faiz Brown's analysis noted that Pacific Gas & Electric stated it cannot legally collect gas and electricity taxes at different rates. A PG&E spokesperson confirmed that, although the measure authorizes the city to further increase gas taxes, PG&E cannot collect that revenue, ultimately cutting off a revenue stream for the city.

Orange County (FL): Amendment 2

Orange County residents are being asked to vote on Amendment 2, a land preservation charter amendment aimed at protecting part of Split Oak Forest, where the Central Florida Expressway Authority is seeking to build a toll road. The proposed road is intended to ease congestion by connecting Osceola Parkway from State Road 417 to Orlando International Airport. But Amendment 2 would prevent county commissioners from using the land for any purpose other than preservation. County Commissioner Emily Bonilla, who supports the preservation measure, said: "It seems like we're moving backward, not in the right direction." The qualitative climate costs of building the toll road include increased air pollution, congestion, and reduced tree preservation. Maggie Holt, chair of the Sierra Club Central Florida Conservation and Politics, said the toll road threatens multiple ecosystems, as well as the carbon sequestration function of natural lands that keeps air clean. Opponents of the preservation measure call the road a "much-needed transportation connection." Suburban Land Reserve and Tavistock Development Company would donate most of the land needed for the $800 million road construction project and donate 1,550 acres as compensation for the 160 acres of land damaged by construction. Even if the amendment receives a majority vote on Election Day, the fight may not be over. The amendment could prevent county commissioners from further supporting road construction, but given that commissioners voted earlier this year to support the road construction plan, it's unclear how much "legal effect" the charter amendment would have.

Nevada: Question 6

Nevada voters will again consider a constitutional amendment requiring the state's renewable portfolio standard, months after the state legislature approved a similar requirement. If passed, Question 6 would amend the state constitution to require electric companies to obtain 50% of their electricity from renewable sources by 2030. Before 2030, utilities would need to meet a series of incremental targets. The initiative received nearly 60% of the vote in 2018, but state law requires constitutional amendments to be approved by voters in two consecutive even-numbered years. Months after voters first approved the amendment, a legislative solution was approved by state lawmakers. State Senator Chris Brooks (D) introduced Senate Bill 358 in 2019, requiring utilities to obtain 50% of their electricity from renewable sources by 2030. Brooks said at the time that introducing SB358 was "in the spirit" of the earlier ballot initiative. The bill passed unanimously in both state houses and was signed into law by Governor Steve Sisolak (D) in April 2019. Question 6 would further prioritize this renewable energy requirement. Dylan Sullivan, an advisor to the Natural Resources Defense Council Action Fund, said the constitutional language means the state has a "floor, not a ceiling" for renewable energy use. "My view of Question 6 is that it's a backstop," Sullivan said. "We don't know what the future holds. But we know we want Nevada to get more electricity from renewable sources like solar and geothermal. It's a backstop that prevents future backsliding." The fiscal impact of the measure is unknown, as the Nevada Secretary of State determined in 2018. The initiative has received substantial written arguments for and against. Supporters say the amendment would reduce emissions, help the state better utilize its solar opportunities, and boost the economy. Opponents call the amendment "unnecessary and risky," saying it would "recklessly pave the way for putting taxpayers at risk, erasing the state legislature's ability to wisely adjust the current renewable portfolio standard." Campaign funding attention in 2020 is far less than in previous years. The political action committee supporting the measure, Nevadans for Affordable, Clean Energy Choices, had raised just over $3,000 as of July 15. No PAC is registered in opposition, and there appears to be little group campaigning. This contrasts sharply with 2018, when the PAC Nevadans for a Clean Energy Future raised $10.74 million to support the initiative, with the vast majority of funds coming from NextGen Climate Action, founded by billionaire and former Democratic presidential candidate Tom Steyer.

Alternative Avenues for Climate Action Financing

Rushad Nanavatty, senior principal at the Rocky Mountain Institute, said ballot measures are "extremely important" for supporting climate action, not only because they bring direct funding but also because they "give city leaders the political permission and cover to make these truly smart investments." Outside of ballot measures, governments may find it difficult to secure funding for climate-related projects. A webinar on "Innovative Climate Finance" hosted by Daring Cities provided guidance, with experts recommending leveraging multi-stakeholder partnerships, encouraging peer information exchange, and testing small-scale financing approaches to reduce risk. Nanavatty said there are also opportunities for federal grants to various city departments and industries, but cities must think strategically about these expenditures to ensure equitable distribution that benefits communities. Beyond government, experts said in a Daring Cities webinar on "Financing Greener Cities of the Future" that cities can leverage partnerships with banks and insurance companies to unlock the potential of natural and climate solutions. Tracy Cumming, technical advisor for the Biodiversity Finance Initiative at the United Nations Development Programme, said during the webinar: "Banks are coming on board. We're seeing development banks and major investment..."