Transfer Taxes and the Fiscal Cliff

If the various constituencies in Washington can’t reach a Grand Bargain before the end of the year, will federal transfer-tax exemptions go over the fiscal cliff? Maybe, says Forbes‘ Deborah Jacobs. But, chances are, the scheduled automatic drop to $1M (which could, theoretically, ensnare a lot of estates) would be corrected retroactively in any eventual deal. Right now, the individual exemption stands at $5.12M, and when one considers that a married couple typically enjoys twice that amount in combined exemptions, it is clear that estate taxes are a non-issue for the overwhelming majority of Americans. At the end of the day, that probably won’t change.

Trees v. Power Lines

On a smaller note, something about the utilities’ storm response in my neighborhood struck a nerve. Whenever I’ve spoken with anyone from any of the utilities, they’ve eventually come around to the same issue: Trees. Almost to a person, every customer service rep, lineman, or technician has pointed out that we have a lot of old trees in this neighborhood, as if this explains why our services are being restored more slowly here than in some neighboring areas. Seriously? So, now the trees are to blame for utility companies’ logistical problems? Just out of curiosity, I compared the outage rates that PSE&G was reporting several days after the storm in two neighboring municipalities: West Orange (where I live, and where most wires are overhead), and East Orange (which is an older city, where most of the utility lines have been buried for over a hundred years). The difference was striking:

Municipality                             Total Customers    Customers Out     Percent Out
ESSEX – EAST ORANGE CITY         30,403                 6,525                21.5%
ESSEX – WEST ORANGE TWP        19,970               11,078                55.5%
Source: Public Service Electric & Gas.

It’s a classic natural experiment, where a sudden event subjects two different scenarios to a comparable set of circumstances, with observable differences between the results. It’s no secret that suburban neighborhoods lose power more frequently, and for longer periods, after storms. And, of course, with a storm of Sandy’s magnitude, one would expect outages to be longer and more widespread. But stop blaming the trees. East Orange has plenty of old trees, too. It also, quite frankly, has a poorer population that enjoys less political clout — leading to an older infrastructure, fewer political favors in a time of crisis, and whatever other indignities such a disadvantage might entail. Yet two days after the storm, the percentage of East Orange households in the dark was approximately one-third of the percentage in suburban West Orange.

Yes, we do have a lot of old trees in this neighborhood. We’re very fortunate, and for the most part they’re great to have around, but sometimes they do come down when there’s a storm. But there’s a practice that’s worked for more than a hundred years to mitigate the effects of storm damage on utilities that transmit by wire: burying the lines. The practice also has the added benefit of creating more attractive neighborhoods by removing one of the most ubiquitous eyesores of the postwar American landscape. It’s not a perfect solution, and in flood zones, it might even do more harm than good. But, in light of the growing frequency of severe weather events, the time has come to start making this investment, again, in the places where doing so would be most effective.

The utilities don’t want to spend the money, and they’ve avoided doing so for a long time. Going forward, that has to change.

Back From the Storm

It’s funny how unaware one can be of his dependence on modernity until a ten-day stretch without power comes along. Fortunately, aside from the epic utility interruptions, there was no trouble at the house. Nearby, things weren’t so lucky. This was the scene at a neighbor’s place after the storm:


Note that this picture was taken after a hundred-year-old tree had been removed from the roof. Here’s a shot of another tree that came down in the same vicinity:

So, the effects of Sandy were fairly bad in this part of Essex County. We have an elevation of about 500 feet a.s.l., and we’re situated on the first ridge of mountains that runs behind the coastal plain– so we took a direct blow from the high winds that came in off the ocean. But the impact here was still mild compared to what happened in low-lying areas of the region: There was no flooding here.

We had no idea, initially, how extensive the damage had been to the entire utility system. There wasn’t much specific communication from PSE&G, Verizon, or Comcast. In the end, it took ten full days to have our electricity restored — almost to the minute. To this day — 23 days after the storm — cable television has still not been restored. Go Comcast! No one in this cluster of houses uses a landline, so who knows what happened with those?