ResourceX Blog Municipal Budgets are a Force for Addressing Climate Change

"We know climate action requires climate investment, but sources of funding can be hard to find. An understanding of budget and procurement has proved critical to unlocking opportunities for climate funding. We spend millions of dollars on energy each year - how can we direct that toward renewable energy? Millions each year on fleet - how do we direct our spending toward zero emissions vehicles? In many cases these climate investments deliver real long-term operational cost-savings." - Oliver Kroner, City of Cincinnati Director of the Office of Environment & SustainabilityAmerican cities are facing an infrastructure project delivery crisis. This was one of the key assessments from the Ambition Gap, a policy brief drafted by ICLEI-USA in 2022. It's a complex statement, but in essence local governments for a variety of reasons are having a difficult time translating their stated objectives - especially regarding addressing the challenges of the changing climate, into actionable, buildable projects. This is not to say nothing is happening within local government, quite the contrary, many cities and local governments are taking action by investing in renewable energy, transitioning their fleets to non polluting alternatives and creating more energy efficient facilities. However, the scale of action required to meet ambitious emissions reduction targets or support the construction of climate resilient infrastructure is not being attained at the moment. The technological and construction wherewithal and the financial resources available through the private sector and federal government are at a level of budget and procurement complexity that many local communities are unsure how to utilize. Several of the key findings of the 2022 Ambition Gap policy briefing are more salient now and are even amplified as acute shocks like heat waves, wildfires and other extreme weather events collide with enduring stressors like aging infrastructure and systemic inequalities within communities, leaving city administrators wringing their hands. Consider these three findings from the research: First, the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) offer unprecedented opportunities for local governments to take action on climate change and inequality, but successful deployment requires cooperation in city-halls between sustainability, procurement, budget and community development officers, alongside of private sector partners that can enhance financial, design and construction capabilities; Second, local governments must begin thinking at larger scales of impact and leverage their existing capabilities in areas where they have direct influence such as municipal budgeting, land use planning, energy procurement and infrastructure design; Third, the financial implications of climate change are becoming more and more in focus. From budget implications to bond ratings and insurance rates (and even insurance availability), the financial risks of climate change are placing strains on municipal budgets in ways formerly unaccounted for in traditional financial modeling. Creating a Community of PracticeRecognizing the needs associated with accelerating climate action plan implementation and the local government 'delivery crisis', Resource X partnered with ICLEI-USA in 2023 to forge a Budgeting for Climate Action learning cohort of nine municipalities focused on advancing their climate action plans and leveraging the resources of their municipal budget to achieve their stated objectives. Each municipality recognized the impediments facing their climate plans and the need to better align their jurisdiction's financial capabilities with the needs identified in their climate plans. This diverse cohort consisted of small towns, counties and the country's largest city, New York City. Several lessons formed as a result of the initial work of this community of practice: Communication across departments is critical. In many cases, budget officers and sustainability or climate teams never had formal communications between their divisions. Creating a common, shared language and understanding of their roles and key milestones is a critical first step towards integrated climate action into the budget process.Creation of a "Climate Budget" process allows for opportunities to integrate citywide goals and targets into the fiscal responsibilities and capabilities of local government. Such integration can help local governments manage progress towards goals like greenhouse gas emissions reduction or installation of climate resilient infrastructure.Climate plan and budgeting integration creates opportunities to measure "true costs" within both the capital and operating budgets of local governments. These true costs are especially true when lifecycle cost assessments and risk management factors are integrated into both the human and physical infrastructure associated with local government operations.