State and local government leaders are starting to allocate funding from the $737 billion Inflation Reduction Act (IRA), nearly $400 billion of which will be spent on green energy initiatives.  And when President Biden signed the bill into law on August 16, he insisted that the IRA is just the beginning of his efforts to enact his climate change agenda.  As state and local lawmakers prepare to spend the money allocated to them through the IRA, they must navigate the hazards that accompany the receipt of these federal funds.

The IRA funds are being provided under the guise of revitalizing local economies, but they are really intended to accelerate the shift to green energy across the country.  An April 24, 2023, Wall Street Journal report details how many small communities across the country are using these subsidies to pursue new and risky green energy projects.

State and local investments in untested technologies produced by unproven companies present what West Virginia State Senator Robert Kernes (R) described as “a wild gamble.”  As the Wall Street Journal article observed, many communities “have been through booms and busts caused by fickle federal incentives.”  When the money dries up or the programs fail, taxpayers are left on the financial hook with little to no prospect of relief.  Given the history of failed federal investments in green energy like Solyndra, Abound Solar, Fisker Automotive, and A123 Systems, which cost (and lost) a combined $1.3 billion, taxpayers will undoubtedly be forced to cover losses from the new, and more expansive “investment” in such programs.

On top of the IRA funding for green energy, several states are already attempting to implement their own “mini-Green New Deal” programs.  New York Gov. Kathy Hochul (D) has made it her mission to force a transition to green energy by including $5.5 billion for such programs in her $216 billion fiscal year 2024 budget.  In California, lawmakers are wrangling over how to plug a massive budget deficit and then find room to fund Gov. Gavin Newsom’s (D) plan to spend $54 billion to help reach net zero emissions by 2045.  

California’s efforts to get to zero emissions are being achieved with heavy-handed and unpopular government mandates.  During the past two years, Gov. Newsom has issued executive orders banning the sale of new gas-powered lawn equipment by 2024, and all gas-powered vehicles by 2035.  The latter policy has been adopted by several states, including New York, Virginia, and Maryland.

Instead of reducing inflation, the IRA will accelerate inflation by adding more fuel to the fire set by the trillions of dollars allocated by Congress since the beginning of the Biden administration.  Left with few options short of declining federal funds, state and local lawmakers must exercise extreme caution before dumping money into unsustainable programs or implementing versions of the Green New Deal in their states and localities.  Sound investments combined with a pointed rejection of an unproven and costly climate agenda will protect taxpayers and reassert states as governing partners, rather than willing subordinates.

When deciding how to allocate funding from the IRA, state and local leaders must carefully consider the constitutional and economic hazards that accompany receipt of federal funds and work to avoid trip hazards that cause lower economic growth and higher taxes for their residents.  They will have a lot of explaining to do when the federal well runs dry.  Spending billions of dollars without first considering the full economic impact could spell disaster for the very people those dollars were intended to help.