Mayor Fenty’s proposed FY2011 budget reprograms the revenue from the Anacostia cleanup fund, generated by the 5¢ bag fee. The Council should quickly reject this approach.
During the original bag debate, many naysayers said that this was just an attempt to raise some revenue through a hidden “tax.” Supporters argued that this wasn’t the purpose.
Instead, it aims to create an economic incentive for people to use reusable bags, taking advantage of the very high elasticity of bag demand based on price. And it’s successfully reduced bag use by 50-80%.
It also raised $150,000, and the Mayor wants to redirect that money. Tommy Wells has already vowed to fight the effort, and the Council should back him up. Their actions on this matter will determine whether the Council can ever pass behaviorally-targeted fees with a straight face.
Economists often recommend such measures, knowing that people’s behavior is far better influenced by prices than by public service announcements or even laws against certain actions. Pollution, in particular, is a classic example of a public good affected by private actions.
If law can turn the externality of pollution into an internalized charge specifically on polluters, we can reduce pollution most effectively. And dedicating the revenue to programs that counter the effects of that pollution ensures that the law addresses the problem directly whether people choose to pay or to change behavior.
The success of such approaches, however, depends on the political will to maintain them. It’s always tempting to just use the revenue for other purposes. The Mayor tried to do the same with the performance parking revenue, which has to go to local neighborhoods to get support for the policies in the first place.
Likewise, municipalities across the nation come to depend on traffic camera revenue, which would likewise ideally disappear entirely if people simply followed the laws. Some jurisdictions ended up with big budget holes after enforcement revenue dropped due to compliance, and a few even shortened yellow light cycles to try to catch more drivers. That’s the wrong approach.
One solution is to create special authorities to manage the money, limited by statute in how they can spend it and relatively inaccessible to political bodies. But those are complex to set up and administer. The better solution is simply for good elected leaders to recognize that they can’t ask voters to support something if they don’t keep their word.
The Council should reject the Mayor’s attempt to raid the fund and keep its own promise to the people of DC.
Update: Wells Chief of Staff Charles Allen pointed out that because the law set up a special “Fund” for the bag fee revenue, the Mayor had to specifically call out the rearrangement of revenue in the budget and seek an “Intra-District Transfer” to reuse it. That calls attention to the move, making it easier for the Council to refuse.