Governor Unveils Ambitious Transportation and Energy Plans

Loren Kaye
President of the California Foundation for Commerce and Education

Governor Brown’s two-for-one speech yesterday was short on a policy agenda but long on economic implications.

Combining his fourth inaugural address with his 2015 state-of-the-state speech, the Governor reeled off the expected catalog of accomplishments and challenges. Of the few new initiatives proffered, two would profoundly affect the California economy.

The Governor spoke of the “importance in having the roads, highways and bridges in good enough shape to get people and commerce to where they need to go,” estimating that the state has deferred maintenance and upkeep needs of $59 billion. “Each year, we fall further and further behind,” he warned, “and we must do something about it.”

Exactly what that is, the Governor demurred. But he did call on “Republicans and Democrats alike to come together and tackle this challenge.”

This could be standard “we’re all in this together” rhetoric. But the only other mention of “Democrats and Republicans” in the speech was to congratulate the parties for their joint work in placing Propositions 1 and 2 on the 2014 ballot. Since the only conditions where the Governor would need both parties to enact a policy is for a tax increase or bond issue, it would not be crazy to think that he was soliciting their help for, say, a fuel tax increase or a new round of bonded debt for road and highway maintenance. (To be sure, the Governor has not hidden his disdain for further debt for infrastructure.)

These financing tools could be temporary, interim measures to bridge the financing gap until a long term solution is adopted by the Legislature. A possible permanent approach could be a fee on drivers measured by miles driven on public roads and highways, currently being tested under legislation adopted last year.

Whatever details follow the Governor’s plug, the mere mention is notable, since solving the transportation funding crisis can only come with the active engagement by the Governor and his team.

Moving his paddle to the left side of the canoe, the Governor elaborated his vision for the next phase of climate change policy, since AB 32 version 1.0 expires in 2020.

The Governor touted progress the state has made so far reducing its greenhouse gas emissions.

“California has the most far-reaching environmental laws of any state and the most integrated policy to deal with climate change of any political jurisdiction in the Western Hemisphere.” He claimed that AB 32 is properly pricing carbon, “showing how the market itself can generate the innovations we need.”

Citing UN experts and the consensus of global scientists, the Governor stated the case for even further emission reductions in California. He reiterated that “reducing carbon is compatible with an abundant economy and human well-being. So far, we have been able to do that.”

For 2030 and beyond, the Governor laid out an ambitious agenda that apparently depends on command-and-control regulation, and less on marketplace mechanisms. His three-point approach would:

  1. Increase from one-third to 50 percent electricity derived from renewable sources.
  2. Reduce today’s petroleum use in cars and trucks by up to 50 percent.
  3. Double the efficiency of existing buildings and make heating fuels cleaner.

Unstated was the actual goal for reducing greenhouse gas emissions – only the mechanisms for reaching the goal were announced. The Governor has announced an ambitious set of policy objectives to restructure energy use in California. Left to be debated by and with the Legislature is whether this is the best approach to meet his larger goal of reducing GHG emissions from the California economy.

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