Creative financing

January 08, 2004

IF THERE WAS any lingering doubt about the desperate need for speedy work to curb pollutants entering the Chesapeake Bay, last year's nightmare of crabs and other sea life scrambling to escape the oxygen-free dead zone that now extends 100 miles through the estuary's main stem must surely have erased it.

The conundrum for Gov. Robert L. Ehrlich Jr. has been how to come up with the billions of dollars required when the state budget is deeply in the red. His solution, expected to be unveiled tonight, is both creative and promising - though we have many troubling questions about the details.

The boldest element of Governor Ehrlich's bay restoration plan is a proposed surcharge on water and sewage bills that would underwrite the sale of bonds to upgrade more than 60 major sewage treatment plants in Maryland by 2011 to make them as efficient at removing the bay-toxic nitrogen as technology allows. He also plans to require that meeting these nitrogen-removal standards be a condition of obtaining sewage treatment plant permits from the state.

This proposal has been in the works for weeks, but in recent days, Ehrlich advisers wisely fended off an 11th-hour suggestion that some of the surcharge money be allocated to other bay-related purposes. Turning the "flush tax," as opponents call it, into a slush fund would likely have doomed it in the already apprehensive General Assembly.

As an alternative, the administration proposes a plan that would solicit and collect private donations for a state-managed Bay Restoration Fund. Tax-deductible contributions to this nonprofit entity could be used in a variety of ways, such as helping farmers plant cover crops to prevent erosion or financing research on protecting bay grasses.

This approach comes with several caveats: Companies might make generous donations expecting regulatory favors in return. Or companies doing business in the state might be shaken down for contributions that they feel they can't refuse. The fund might be asked to shoulder responsibilities that should be met by the state, or it might become a competitor for donations that would otherwise go to private conservation groups.

Any of those outcomes would be a disaster for the bay, and must be avoided.

Selling this package to the legislature will fall to Kendl P. Philbrick, the acting secretary for the environment, whom Mr. Ehrlich has finally decided to name to the post. A businessman assigned by Mr. Ehrlich to run the regulatory agency as punishment for environmentalists who defeated Mr. Ehrlich's original nominee, Mr. Philbrick was nobody's top choice for the post. The environment is neither his passion nor his area of expertise. But if Mr. Philbrick can win approval of a progressive package for bay improvement, he may at least calm fears that he seeks to subvert his agency's mission.

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