Not Just Enviros, Biz Also Split on Cap-n-Trade Bills; GOP Might Hold the Key

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Much has been made in news reports that the environmental community is not of one mind on the cap-and-trade bills produced by the governor’s negotiations. They are not alone. The business community is split as well.

Tom Scott, Executive Director of the National Federation of Small Business/California argues on behalf of his membership that small business will be hurt by the cap-and-trade legislation. “Some believe Cap and Trade only impacts big businesses that buy and sell carbon credits, but the truth is that small businesses and consumers all pay the ultimate price of higher energy costs to produce and deliver goods,” Scott wrote in his article elsewhere on this page.

However, California Manufacturers & Technology Association president Dorothy Rothrock said “CMTA supports AB 398 and AB 617 to continue California’s responsible leadership role by extending the cap-and-trade program, promoting a stronger economy through protecting manufacturing jobs and providing for local environmental improvements.”

Rob Lapsley, president of the California Business Roundtable also supports the cap-and-trade bills: “These bills create a balanced policy strategy to extending California’s cap-and-trade program, which represents the most effective market based approach to achieving our climate goals and growing our economy.”

The unusual internal squabbling in the environmental and business communities–similar interests typically coalesce around issues–is the sound of compromise to observers like the Sacramento Bee editorial board, which recommends passage of the bills.

Does the squabbling help or hurt the chances of passing?

Gov. Jerry Brown steered his cap-and-trade ship through perilous shoals hoping to pick up Republicans and business-allied Democrats without losing too many progressives to achieve the necessary two-thirds vote.

The question as usual comes down to costs or taxes. Previous cap-and-trade bills have added 11-cents a gallon to the cost of California fuel. This measure could add much more. A hidden tax, opponents call it. That argument might frighten lawmakers who voted for the gas tax increase last April.

How much will voters stand? Already there are hints at a revolt with polls showing opposition to the gas tax increase. And, that tax won’t be collected until November.

The tax issue is difficult for some Democrats who already voted for the gas tax. So in a strange way, the super-minority Republicans may hold the key to Brown getting his cap-and-trade measure passed.

Practically all Republicans opposed the gas tax bill. Cap-and-trade is not as in-your-face as a direct tax increase, which may convince some legislators they can risk a yes vote without severe backlash. Republicans are seeking trade-offs on the tax issue. One feature Brown agreed to in the package was ending the fire prevention tax that hits many rural areas represented by Republicans. Another deals with manufacturers’ tax credit. Is that enough to sway some Republican legislators?

The cap-and-trade debate is a rare moment in the legislature where the term “usual suspects” for or against an issue does not apply.

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