DeSantis tells Biden: Keep your IRA money

President Joe Biden is offering one of his White House challengers hundreds of millions of dollars to spend in his state. The only problem: that opponent is refusing to take it.

The Inflation Reduction Act makes Florida eligible for some $350 million in energy efficiency incentives. But Gov. Ron DeSantis has rejected the funding and other measures, creating the most prominent blockade by any Republican governor against Biden’s economic agenda.

And there’s nothing the White House can do besides hope he changes his mind.

The rejection has the potential to create significant ripple effects, politically and economically, in the coming months. As the president and his Cabinet members go around the country boasting about the IRA, rebates for energy-efficient purchases — the majority of the funding that DeSantis has refused — have played a particularly prominent role. That’s not just because they underpin the administration’s climate agenda but because they provide direct rebates to consumers.

The IRA allows governors the authority to block a handful of its programs, and with it, the power to blunt the political impact of legislation that some Democrats believe will be a key factor in the 2024 election.

Through a veto of his legislature’s request, DeSantis turned down $5 million to set up the rebate program for consumers who buy energy efficient appliances and retrofit their homes. It also effectively blocked $341 million to fund the program because the state would need the administrative money to apply for the program, according to people familiar with Florida's budget process. However, federal Energy Department rules allow a state to accept the second pot of money even if they don’t take the first. If Florida doesn’t apply for the full $346 million by next August, the law allows DOE to provide Florida’s money to other states.

The governor also rejected $3 million in IRA funds to help the state fight pollution and rebuffed the Solar for All program which would have paid to help low-income people access solar panels. DeSantis also vetoed $24 million in grants from the Bipartisan Infrastructure Law.

So far, DeSantis is the only governor to signal that he will block the energy rebates. But on the smaller sums of money, he has company. He’s one of four to turn down pollution mitigation funding from the IRA. The others are the Republican governors of South Dakota and Iowa, and Kentucky’s governor, who is a Democrat. The states that haven’t applied for the solar fund are all led by Republicans. They include Florida, Idaho, Montana, Nevada, North Dakota and South Dakota.

The Biden administration has explored ways around the energy rebate blockade but has come up empty so far, according to federal and state officials. The IRA was written in a way that requires the rebates to go through a state energy office. Unlike many federal laws, there is no federal fallback option or way to circumvent an obstinate governor.

That leaves the Biden administration hoping Florida will reconsider — and that the IRA funding doesn’t snowball into a political litmus test for GOP governors as Obamacare’s Medicaid expansion, and the Obama administration’s high speed rail funding, did a decade ago.

So far, the White House hasn’t publicly hit DeSantis by name over the rejection of funds, perhaps in hopes that he changes his mind before time runs out next August.

“It’s unfortunate that some officials are putting politics ahead of delivering meaningful progress for hard working Americans,” said White House spokesman Michael Kikukawa. “Despite this, President Biden and his administration are working with cities, counties, businesses, nonprofits, and other entities in the Sunshine State to ensure Floridians benefit from the lower costs and stronger economy delivered by his agenda.”

There’s reason to think Florida wants the funds: the state’s energy office requested them and the state legislature approved it before DeSantis vetoed a grant for the program.

“It’s clear from Administration conversations with Florida’s state energy office that they want the rebate funding,” said an administration official granted anonymity to speak freely. “After all, that’s why the request for accessing the administrative funding was in the budget line DeSantis vetoed in the first place — because the state energy office asked for it.”

Administration officials expressed confidence that Florida residents will ultimately get access to the rebates — even if they have to wait until after the Republican primary concludes or, at worst, the presidential election.

Republican governors used their opposition to high speed rail funding and Medicaid expansion dollars during the Obama era to showcase their fiscal conservative bonafides and the extent of their opposition to a Democratic president. In that vein, South Dakota Gov. Kristi Noem’s spokesman Ian Fury said that she “absolutely believes that the federal government’s wasteful spending, much of it at the behest of President Biden, is the single largest cause of the inflation crisis that our nation finds itself in.”

But Democrats believe the situation is different now compared to a decade ago. DeSantis’ decision could serve as a line of political attack: with another hurricane looming amid possibly the hottest summer on record, the governor is placing opposition to Biden over helping Floridians weatherize their homes, and helping protect them from pollution or buy energy efficient appliances.

“He’s senselessly making the state more vulnerable,” said Rep. Darren Soto (D-Fla.), who is on a House panel that works with the White House on implementation. “A lot of other states that are majority Republican haven’t been this foolish.”

The DeSantis administration did not return repeated requests for comment.

The Florida Democratic Party plans to put public pressure on DeSantis to reverse course. Party Chair Nikki Fried said many people don’t yet know about the fallout of the veto. Still, she doubts DeSantis would reverse course. “He is not one who admits that he made a mistake or changes his course,” she added.

Soto is urging the administration to work with local officials where it can. The climate funding, for instance, can go to localities instead of a state. Three Florida cities have taken it up.

“My main goal is to get the money to Florida so my advice to the White House has been work with the local government and go around the state in every way possible,” he said.

The administration does not have a work around option when it comes to the rebates program, however. That program is supposed to help consumers cover part of the cost of projects such as insulating homes, installing a heat pump or upgrading to Energy Star appliances. The administration projects that the $8.5 billion program will save consumers up to $1 billion in energy costs and support an estimated 50,000 jobs in construction and other sectors.

Half of the money is supposed to go to households with incomes at or below 80 percent of the area median income. White House climate and energy adviser John Podesta said rejecting the rebates is a disservice to low-income households.

“Governors who are interested in servicing those communities would be well advised to kind of take that money and put those programs into effect, and then make those rebates available,” Podesta told reporters recently.

Other states are eager to take their piece of the money Florida has rejected. Sen. Jack Reed (D-R.I.) has asked the Energy Department to send Florida’s money to his and other states. Rhode Island “could utilize additional funds that Florida’s Governor may not accept for purely partisan reasons,” Reed wrote to the Energy Department.

In Kentucky, Democratic Gov. Andy Beshear, who is up for reelection this fall, has applied for “a number of federal grants,” according to John A. Mura, spokesman for the Kentucky energy and environment cabinet. But, “local governments are best situated to apply for and administer the Climate Pollution Reduction Grant funds,” he said.

Florida’s rejection of IRA money is not absolute. The state has accepted other pots of money, including $3.75 million to support urban tree canopies and access to nature, $209,000 for pollution control and $78.7 million to several state and local entities to protect against climate change — a fund that is made up of the IRA and the Bipartisan Infrastructure Law.