California Gov. Jerry Brown is trying to amend Senate Bill 32, which would extend “targets” for greenhouse gas emissions reduction beyond 2020, in order to pass an extension of cap-and-trade “proceeds” (i.e. taxes) without the constitutionally required two-thirds vote of both houses of the legislature to pass a tax.
California has sought to be the world leader in combating “climate change” since 2006 by legislating reductions in carbon output for cars, utilities and industry through the purchase of cap-and-trade credits for the right to burn fossil fuels. The system was designed to disguise tax increases artfully as “proceeds.”
Democrat backers of the legislation claimed that about $6 billion a year in mandatory cap-and-trade auction “proceeds” would solve the climate change crisis by 2020 though “investments” in meritorious boondoggles like the infamous “high-speed rail,” electric buses, and a grab-bag of Democrat-manned regulatory boards.
But the Air Resources Board has conducted 13 quarterly cap-and-trade auctions since November 2012 and only generated roughly $3.5 billion in state revenue. The auction value of credits has plunged from $23 in 2012 to about $13 today. Even after the expansion of the program to include fuel suppliers, the Legislative Analyst’s Office forecasts that the state only pocketed $2.4 billion in 2015-2016 cap-and-trade auction proceeds and expects to see proceeds fall to $2.3 billion in 2016-17.
Despite raising only a fraction of the expected $60 billion in proceeds, and building less than 1 mile of ”bullet train” track, greenhouse gas reduction has already exceeded California’s 2020 goals by exporting a huge swath of the state’s middle class jobs base.
Breitbart News recently reported that from 2008 to 2015, 9,000 companies left California, according to the 378-page study by Spectrum Location Solutions, California’s Forty Year Legacy of Hostility to Business. Spectrum points out that there has been a mass exodus of businesses to more “friendly” locations like Texas and Nevada.
Right behind the jobs the jobs leaving, the most recent IRS update for state-to-state population movement found that California exported a net 57,900 citizens from 2013 to 2014. Apparently following their high-paying jobs, residents that left California for other states had incomes that averaged $7,100 higher than California’s average income.
Despite this horrific social policy outcome, Gov. Brown tried to sneak a cap-and-trade tax extension into the bipartisan SB 32, which would only “set a target” for reducing so-called greenhouse gas emissions to 40 percent below 1990 levels by 2030.
As a fourth-term Democrat governor, Jerry Brown would be out of office before the wildly unpopular taxes take effect. But a group of moderate Democrats, who are becoming increasingly squeamish about more middle class job losses, bolted on August 4 and promised to kill the amended bill if it still has cap-and-trade taxes.
With the clock for the legislature running down to the August 31 deadline to pass legislation in this session, Brown now appears willing to try to pass the bill without a two-thirds majority in both houses of the California Legislature.
Such a move could be legally dicey, due to the California Chamber of Commerce lawsuit that is about to go to trial after four years in the courts. The suit alleges that cap-and-trade auction proceeds are an unconstitutional tax, because it was not passed with two-thirds majorities as required under the California Constitution for taxes.
It is doubtful that moderate Democrats in an election year are about to change their minds by the end of the month and back Brown on taxes. Consequently, Brown appears willing to roll the dice and pass SB 32 with a simple majority and hope the courts redefine state mandated auction proceeds as something other than a tax.
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