Sometimes Going Green Goes into the Red

The Wall Street Journal is, as Cindy would say, a great source of Blog Fodder. Last night's editorial page was about a good idea gone bad. A good green idea that just didn't work out.

In 2005, the Nevada legislature decided to go green. So they passed a bill that would cut property taxes in half for any new buildings that complied with the Leadership in Energy and Environmental Design, or LEED standards. They also lowered sales taxes for building materials to just 2 percent. These are well intentioned guidelines that promote using recycled materials, reduce water use, and promote conserving electricity. That sounds great...but Nevada is already a low tax state with no income tax and billions in construction going up every day.

According to two environmentalists Auden Schendler and Randy Udall, LEED is a "costly, slow, brutal, confusing, and unwieldy, a death march for applicants administered by a soviet-style bureaucracy that makes green building more difficult than it needs to be."

And guess who got the biggest share of this tax giveaway? The casinos, including MGM, who saved $270 million in taxes on their 7.4 billion City Center project.

Fast forward to 2007: It turns out that a plan that was anticipated to cost $250,000 per year is now a groaning $974 million in losses over 10 years. So the legislature "essentially asked for a mulligan" and has worked out a compromise to end the sales tax cut and push the tax break to a maximum of 35%. The Journal's point is: sometimes the market is a better promoter of energy efficiency than tax policy.