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Legislative showdown on cap-and-trade on tap

Uploaded: Aug 23, 2016

With less than 10 days left in the legislative session, Sacramento politicians and lobbyists and scurrying to cut deals.
One of the biggest ones is whether to extend AB 32—the climate change legislation signed by former Gov. Arnold Schwarzenegger during his lousy term as the state’s leader. The bill sets ambitious carbon reduction goals and empowers the state air board to carry it out. The state and regional air boards, along with the state and regional water boards, are the most powerful unelected bodies in the state.
The key sticking point is the state’s cap and trade auctions that have proven, for the most part, to be immense cash cows for the state board. The current crunch is legal counsel has opined that cap-and-trade only runs to 2020.
So you have the governor, rampant environmentalists and their elected allies (largely representing coastal counties) trying to jam this through the Legislature, while more moderate Democrats have realized just what a staggering cost all of the uniquely California laws have on their poorer constituents. These inland Democrats want to exercise legislative oversight on the air board—an excellent idea.
Toss into the mix the governor’s legacy project, the absurd high-speed rail, and it gets more complicated. The construction entities and labor unions like all big infrastructure projects because they are long term job generators and pay union scale under the prevailing wage laws.
A couple of years ago, the governor cut a deal with legislative leaders to allocate 25 percent of cap-and-trade to his train. To do that, there has to be a predictable revenue stream to pay back the bonds that would be sold to fund construction. It is still a question whether the high speed rail project meets the carbon reduction goals.
It would be wonderful to see the climate change hustle go down and take the train with it. The high-speed rail, as I and many others have opined, is perhaps the greatest boondoggle in state history. There’s no chance that it will perform as it was advertised when the public was sold a bill of goods in 2008 and the price already has soared.
It’s time to cut the state’s losses and not throw more good money after bad. Remember it was originally billed as a $33 billion project and then skyrocketed to $98 billion before a pared down version was priced at $68 billion. It also was supposed to operate without any public subsidy and attract private investment.
There’s been no private investment to date with those wise folks sitting on the sideline. You can be sure they are waiting for an iron clad funding guarantee from the taxpayers.
Incidentally, one more wrinkle: the state’s last auction of cap-and-trade credits bought in just 11 percent of the estimated total. If that trend continues, the money gusher is largely capped.
The governor, reportedly, is so committed to the climate change issue that he is threatening to put together an initiative if the legislature does not act.

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