In California, an odd team has hatched a plan. This most unlikely duo will create a polluter’s auction to siphon off $1 billion from state businesses to start construction on one of the state’s most mismanaged projects: high-speed rail.
The California Air Resources Board (CARB) has authority under California’s landmark 2006 climate law, Assembly Bill 32, to implement a “cap and trade” system to reduce greenhouse gas emissions.
To decrease California’s greenhouse gas levels, CARB will begin allocating carbon dioxide emission permits to 350 businesses across the state. If a business exceeds its emission cap, it may buy additional credits or offset the emission by reducing greenhouse gases through other means, such as planting trees. Meanwhile, the cap on pollution levels is gradually lowered over time. When CARB distributes its cap and trade credits this year, however, it will now retain about 10 percent of its permits for a side auction.
Creating this unauthorized revenue stream is a major statutory overstep from AB 32. While the original law allows CARB to raise revenue for its own administrative purposes, it certainly does not permit the agency to hand off $1 billion to an entirely different government agency. This is a legally perilous maneuver for the Administration.
What’s more bizarre is where the money will go. The Administration plans to redirect the money to high-speed rail. In doing so the state faces a major legal hurdle. Spending these fees on anything other than CARB’s administrative needs transforms the auction credit’s status from a “fee” to a “tax.”
Without approval by two-thirds of the Legislature, this plan will violate Proposition 26. In 2010, a majority of voters passed Proposition 26 to explicitly prohibit the Legislature from raising taxes by disguising them as fees. All tax and fee increases now require the support of two-thirds of the Legislature. So should this one.
It’s bad enough the 2012-13 budget assumes an additional $1 billion in revenue by simply creating a new tax on recession-battled employers when this money should be used by employers to hire more workers. Instead, the ignoble recipient of CARB’s auction is the Rail Authority, which has yet to demonstrate why it warrants such an investment.
I want to see the high-speed rail succeed if its viability is clearly demonstrated. So far, however, the Rail Authority’s shaky financing plan and well-documented mismanagement threaten to derail the program before it begins. Respected independent experts, from the State Auditor to the nonpartisan Legislative Analyst, have cast legitimate doubt upon the Authority’s ability to undertake its mission. Even formerly supportive legislative Democrats are now interested in suspending the project, publicly citing their disenchantment with the rail’s progress and price tag, which has ballooned from $33 billion to $98.5 billion. Without legitimate ridership projections, the state risks further fortifying our growing wall of debt.
I hope Governor Brown’s leadership can turn the project around. I share his determination and optimism to improve our statewide job climate and pursue environmental reform. His commitment to renewable energy, for instance, is laudable. I am proud to be one of the few Republicans to have supported California’s move to ramp up renewable energy standards.
As a California native I grew up in awe of our country’s space program. Many of my neighbors spent their careers manufacturing the components that eventually produced American space flight. I understand the powerful nexus between investing in ambitious public works programs and creating well-paying jobs.
Still, Californians have demanded that we do not divert their tax dollars without a two-thirds vote. Circumventing the people’s will through an unsanctioned cap and trade auction is, therefore, not my idea of a fair investment and should not be supported.