There’s an old saying in politics: “Sunshine is the best disinfectant.” Unfortunately, the California Air Resources Board (CARB) has been operating under cover of dense fog for several years now when it comes to accounting for millions of dollars in “administrative fees” it spent on managing AB 32, the state’s global warming law.
To date, the Legislature has appropriated nearly $100 million to CARB for this purpose, “borrowed” from unrelated special funds (the Recycled Beverage Container Fund and the Motor Vehicle Fund). CARB has consistently failed to adequately disclose how those monies were spent.
This isn’t just about sloppy bookkeeping. It’s about the willful and deliberate act of a public agency to spend public funds free of oversight by the People and the Legislature. The truth is CARB has refused from day one to respond to regulated entities’ inquiries about how CARB calculated the amount it expects it has already spent and will need to underwrite its future AB 32 administrative duties.
Since 2009, CARB has paid lip service to inquiries about its administrative costs by conducting public workshops at which assertions on its AB 32 Administrative Fee budget were presented, but which included only the broadest of figures with no documentation as to details or assumptions.
The regulated greenhouse gas emitters, who will be required to pay the millions in fees, and taxpayer and small business organizations, were understandably concerned. Finally, when requests to CARB staff fell on deaf ears, 13 associations representing the regulated parties, small businesses, and taxpayers filed a Public Records Act request to obtain substantiation for how the initial $57 million, for the program’s first two fiscal years, was spent.
CARB grudgingly released some records at intermittent intervals, but withheld nearly 50,000 pages of documents. The records released fell far short of providing a clear picture of where those millions went.
Due to CARB’s unwillingness to provide the required information, even after being sued for it, an independent economist was brought in to analyze the few documents that were provided. The findings were troubling, to say the least.
Only 46 percent of 2008-2009 expenditures and only 36 percent of 2009-2010 expenditures, claimed by CARB were documented.
In summary, only 40 percent of CARB’s claimed AB 32-related costs were documented – with 60 percent remaining unsubstantiated, including expenditures of more than $26 million for salaries and almost $4 million for administrative overhead over a two-year period. As a reminder, thus far those monies have been diverted from other special funds. But now, under its recently adopted AB 32 administrative fee regulation, CARB will be looking to private manufacturers, food processors, refiners and others to foot the bill.
The agency has asked for another $62 million for the 2011-2012 fiscal year, a large portion of which will be used to repay previously borrowed funds for expenses that have not been properly accounted for.
The people have a right to know whether or not those dollars are being spent responsibly and legally.
I have asked the Joint Legislative Audit Committee to approve an audit of CARB’s handling of the AB 32 administrative fees with which it has been entrusted. A few of the questions that should be answered are:
- Do CARB’s cost allocation methods comply with applicable laws?
- Were CARB’s methods for allocating salaries, benefits and operating expenses reasonable, and did they comply with applicable state laws and Department of Finance regulations for accounting for agency expenditures?
- What method did CARB use to determine the $62 million in total required revenue for 2011-2012?
Before authorizing CARB to spend another dime, we need the bright sunshine of a formal state audit to bring transparency to the agency’s secretive accounting practices. The people deserve, and can afford, no less.