With a major announcement last Monday, Senate pro Tem Senator Darrell Steinberg announced a new major spending initiative with the funding to come from expected Cap and Trade revenues.
Steinberg’s proposal can be viewed here.
The plan encompasses a wide range of projects, from transportation, to new streets, funding for below market rate housing, funding for transportation and, of course, major funding for High Speed Rail.
This is the kind of new spending that Governor Jerry Brown has continually opposed and on numerous occasions, he has stated now was not the time to be starting many new spending proposals.
The inclusion of High Speed Rail funding is obviously meant to appease the Governor who, despite the major legal setbacks and wide ranging public support to stop the HSR project, the Governor continues to actively support its construction. Right now, how to continue to fund HSR is a major obstacle, since issuance of more Prop 1A bonds is being held up in the courts.
Underneath all of this is the realization that just a short time ago, Steinberg in a major speech at the Press Club on Feb 20th, was pushing for a Carbon Tax to fund new projects. In that speech he was also hammering away pointing out the problems and deficiencies of Cap and Trade funding. Video of the speech and full text are available here.
We read the following from this speech:
… I am concerned that bringing fuels under Cap and Trade leaves consumers vulnerable to anti-competitive behavior and Wall Street traders, which have led to unpredictable price spikes and shortages in the past.
….I am not alone with my concerns. A 2008 Congressional Budget Office report cautioned that, quote, “C02 allowance prices could affect energy prices, inflation rates, and the value of imports and exports. Volatile allowance prices could have disruptive effects on markets for energy and energy-intensive goods and services.”
….Under Cap and Trade, no one can tell us whether fuels will trade at 10 cents or 40 cents a gallon in 2015, at any given time and without warning.
….it is estimated that the Carbon Tax will cost 24 cents a gallon, which is still lower than the upward price risk under Cap and Trade at 40 cents a gallon. It isn’t until 2029 that a carbon tax on gasoline is estimated to pass the upward price risk of Cap and Trade
….Putting a price on carbon fuels is essential to salvaging our environment
So now 2 months later, Steinberg has abandoned the Carbon Tax and now embraces Cap and Trade funding, the same funding he hated just this short time ago. Why the change? Did losing the 2/3 Democrat majority in the Senate, needed to pass a new tax, have anything to do with this sudden change of opinion?
For sure the envisioned possibility of funding being claimed in the amount of $5 billion per year has brought out scores of lobbyists, all seeking funding for what they claim are wonderful proposals and, of course, all fall under the needed mandates of helping to meet the greenhouse gas goals set forth in a number of laws, including, SB375, SB535, SB1018.
Still simmering in the Appellate court, is the whole question of whether Cap and Trade revenues are really nothing more than a new tax. If so ruled a new tax, than a 2/3 majority will be needed to achieve such funding.