Lost in the discussion about a tax stabilization agreement between the City of Providence and Dominion, the company that owns the Manchester Street Power Station, is the question of whether or not we, as a city, want to incentivize the use of fossil fuels though tax breaks. The power plant, converted to burning natural gas in 1995, produces 450 megawatts of electricity, enough to power 112,000 homes. Natural gas, as we are learning, is far from natural or safe, and for environmental reasons, notably global warming, we should be doing everything we can to get off fossil fuels. Giving tax breaks to fossil fuels burning power plants incentivizes their continued use and possible expansion.
The property tax situation with the power plant is complicated. A previous, court ordered tax break expired in 2016. Dominion paid $5.2 millions in lieu of taxes to the city for the year 2015-2016. For 2016-2017, with no tax stabilization plan, Dominion is on track to pay the city $9 million in taxes. This sounds like a windfall for Providence, but because of the state’s 4 percent property tax revenue cap, city councilors fear that putting Dominion on the tax roles will actually cost the city money it hopes to raise through a general property tax increase. (The ProJo covers this issue here and here.)
These considerations were not the focus of discussion at Wednesday evening’s Providence City Council Finance Committee meeting, but they have been lurking in the background. Nevertheless, when Committee Chair John Iggliozzi asked Assistant City Solicitor Lisa Fries about the advantages of entering into an agreement with Dominion in lieu of taxes, Fries merely ran through the numbers, saying that Dominion would pay more under this agreement than under the previous agreement, and that the City would be able to negotiate for rights to a small strip of land connecting to Collier Park.
Providence City Finance Director Lawrence Mancini confirmed that the first payment, $9 million, has already been paid by Dominion. Satisfied, the Finance Committee sent the tax stabilization agreement to the full city council for a vote. The lower payments Dominion faces over the next four years reflect a $4 million giveaway to the company.
The ordinance itself does not state any of the reasons given above for entering into an agreement with Dominion and instead contains two new, entirely different justifications:
“Granting the stabilization requested will continue to inure to the benefit of the City of Providence and its residents by reason of the willingness of Dominion to retain or expand its facility in the City of Providence; and…
“Granting the stabilization requested will continue to inure to the benefit of the City of Providence and its residents by reason of the willingness of Dominion to retain its facility for a manufacturing or commercial purpose, namely the generation and transmission of electricity.”
As the ordinance is written, the only reason stated for the tax stabilization plan is that the City of Providence wants to keep the fossil fuel burning power plant open and possibly expand its operations. This is exactly the opposite of what the people of Providence, Rhode Island, the Unites States and the world need.
If Dominion can pay $9 million this year they can pay $9 million next year, and the next. Giving a $4 million tax break to a fossil fuel company is the opposite of what we should be doing if we are seriously trying to avoid the worst excesses of global warming.