The arguments legislators will make are:

1. The current Cap & Trade law was set to expire, if it had expired ALL authority to meet carbon emissions would have shifted to the unelected and unaccountable Air Resources Control Board – an agency with NO oversight. THE CARBON EMISSION REDUCTION MANDATE WAS NOT GOING TO EXPIRE.
2. It moves the program to a market based system instead of a commend and control structure.
3. It saved about $16 billion dollars, including eliminating the fire tax.
4. It helps our energy agricultural and manufacturing sectors and was heavily supported by those industries.
5. It is accompanied by ACA 1 that creates a lockbox so the funds can’t be used for other pet projects, like the bullet train to nowhere.

HJTA’s response is:

Points 1 & 2: The first part of the sentence is true. If cap-and-trade had been allowed to expire in 2020, the California Air Resources Board would have had unmitigated ability to take whatever steps it deemed necessary to ensure that CA hit a 40 percent reduction in greenhouse gas emissions by the year 2030. HJTA continues to argue that a market based cap-and-trade system was better than a CARB centered ‘command and control’ solution. What we take issue with the fact that there was no relief in the bill for middle class taxpayers, that prices at the pump could still go as high as 71 cents per gallon higher by 2031, and the reforms in the bill are essentially worthless and will not accomplish what the proponents claim.

CARB is unelected, but the majority of the appointments to the Board are made by the Governor and serve at his pleasure. That sounds like oversight to me.

3. Republicans that voted for AB 398 are running around saying that they saved taxpayers $16 billion and that this was a “victory.” They are basing that figure off of what might have happened with a CARB centered solution vs. a continuation of cap-and-trade. Again, there is credible evidence that command and control would have been worse for taxpayers to the tune of potentially $2/gallon of higher fuel costs. The only problem is you cannot message hypothetical scenarios. Voters don’t understand cap-and-trade, greenhouse gas emission levels, or what it means that you “saved” taxpayers from paying $2 more per gallon. What they do understand is that eight Republicans voted to increase your price at the pump by 71 cents a gallon, and provided no relief for middle class taxpayers. There are no provisions in the bill to provide consumers rebates from cap and trade monies in exchange for these higher gas prices.

Republicans will argue that they had no choice, that they had to put up the deciding votes to increase your gas prices by as much as 71 cents because otherwise prices would have been higher. But what if Republicans hadn’t voted for AB 398? Their refusal to give in to the type of extortion reflected in the cap and trade bill may very well have forced the Democrats into approving a CARB style bureaucracy with a simple majority vote. The far left of the Democrat party may have cheered but, for Republicans, it would open up vast new demographics – working Hispanics, other ethnic groups and recent immigrants – for whom just a few more cents in a gallon of gas is a big deal. Democrats would have owned cap-and-trade and the Republican brand would have been protected.

4. The cap-and-trade bill does not repeal the fire tax. It merely suspends it until 2031. As many know, HJTA has an active lawsuit against the fire fee on the grounds that it is an unconstitutional tax. Because AB 398 only suspends the fire fee going forward, our class action lawsuit will have to continue so that we can attempt to secure refunds for the five years of the fire fee that people have already paid. There’s also nothing that says the Democrats can’t bring the suspended fire fee back, on a majority vote, at any time between now and 2031. So while the suspension of the fire fee is welcome relief for rural property owners, it is a hollow victory at best.

5. Industry did get some of the things they wanted. Agriculture got a “verbal commitment” from the Governor that they would receive some cap and trade funds. Manufacturing also received some sales tax exemption relief. That’s all well and good for those industries. But did a majority of California taxpayers get anything for 71 cents of higher fuel prices? They did not.

6. There is no guarantee that a companion Constitutional Amendment to the cap-and-trade bill (ACA 1) will end, or even slow down, high speed rail. First it needs to be approved by voters next June, which is not a guarantee. The bill restricts any of the cap-and-trade money from being spent between 2021-2023. At that point, legislators will have to put up a two-thirds vote to spend the money, including on things like high speed rail. They don’t have to vote on how to spend the money every year, just one time in 2023 or 2024. After that, until 2030, Democrats can spend the cap-and-trade money however they wish on just a majority vote. Further, Republicans tied the manufacturing tax credits to the two-thirds vote. So manufacturing doesn’t get their money unless high speed rail gets funded. In doing this, Republicans eliminated their own leverage. So assuming Democrats don’t have a two-thirds supermajority outright in 2023, it should be easy to find the 2 or 3 Republican votes needed to continue to fund high speed rail.

Ask yourselves, is this a good deal for middle class taxpayers?

David Wolfe
Legislative Director
Howard Jarvis Taxpayers Association