Cap & trade will drive up gas prices, burden small businesses

Friday, July 21, 2017

With the recent vote by the legislature to extend the governor’s cap-and-trade proposal, there have been a number of questions about the bill’s merits

Here are reasons why I opposed AB 398 (E. Garcia, D-Coachella):

  • AB 398 will result in higher prices at the gas pump – by as much as 73 cents per gallon. This is a very real cost that families and small businesses across the state will have to bear and it comes on top of the new 19 cent per gallon gas tax the legislature passed this year with SB 1. That is why it was opposed by the Howard Jarvis Taxpayers Association.

  • AB 398 was passed in the name of fighting climate change, but this bill did not set any new clean air requirements. It was simply a way for the governor and Democratic leadership to create a multi-billion-dollar slush fund. Under the cap-and-trade scheme, it is expected that $10.5 billion will continue to go toward funding the governor’s high-speed rail train – a project that will actually increase carbon emissions, not decrease them.

  • During his testimony on AB 398, the Governor contended that without cap and trade, “The [Air Resources Board] will regulate…in a way that is not efficient…that will be three to five times more costly,” calling the board’s potential approach an “extensive, massive, intrusive regulatory burden.” In making this case, the governor and Democratic leaders admit they do not have confidence in their appointed bureaucrats to the Air Resources Board to enact regulations that won’t destroy our state’s economy.

    Keep in mind that of the 14 members of the Air Resources Board, 12 are appointed by the Governor. The website for the Air Resources Board says these members serve "at the pleasure" of the Governor. If the board took action that was detrimental to our state, couldn’t the current Governor, or any future Governor, remove members and appoint replacements? I believe this entire argument is an attempt to deceive.

  • AB 398 would not be needed if the Governor simply had the courage to instruct his own appointed bureaucrats at the Air Resources Board to implement clean air standards in the least costly way possible, but that solution would not have raised billions in new gas taxes for high-speed rail and other big government programs.

  • AB 398 helped many multi-national corporations by taking the burden off them in meeting low-carbon standards and making individuals and families pay more in gas and fuel costs. The National Federation of Independent Business (NFIB), which represents small business owners, opposes this legislation because of the heavy cost it will impose on small businesses and consumers. It is the duty of legislators to help all businesses – big, small, and midsize. If you only help large businesses, that is crony capitalism. We should be legislating opportunity for all and favoritism toward none.

  • Proponents say AB 398 is a market-based solution, but this is another attempt to deceive. Who is running the current cap-and-trade system? The Air Resources Board. Who will continue to run cap and trade? The Air Resources Board. This is a government-created scheme, not a free market.

At the end of the day, my job is to protect the everyday citizens of our community and state. With the taxes this bill imposes, there is no benefit and no services rendered to justify what is being paid out by Californians – only pain at the pump.

For further information, I encourage you to read more below.   

AB 398 will increase taxes

According to a letter from the nonpartisan Legislative Analyst’s Office to Assemblyman Vince Fong (R-Bakersfield), the price of gas will increase by as much as 73 cents per gallon. This government-imposed cost is another tax.

From the Howard Jarvis Taxpayers Association, in opposition to the bill:

Nationwide fuel estimates are approximately 850 gallons a year for an average household.  Cap and trade, combined with an average annual $400 in SB 1 gas tax household costs, will amount to $1000 of completely new fuel taxes every year by 2030. 

“With AB 398, this is simple: a vote for this bill is a vote for higher gas taxes. Once you’ve increased gas taxes by an additional 71 cents, taxpayers won’t understand or appreciate the argument that ‘it could have been worse…’”

Californians are already some of the most overtaxed citizens in the entire country – and there are few results to show for it. We have the highest statewide sales tax, yet 1 in 5 Californians live in poverty and our state has 34 percent of the nation’s welfare caseload. For over a decade, 500 CEOs rank California 50th in business friendliness. Even though our gas taxes are already among the country’s highest, our roads don’t show it. Still, drivers will be forced to pay another 19 cents per gallon of gas come this November. On top of it all, our schools are failing and families are being priced out of their homes. 

Here, the one-party system has failed us and shown little real interest in making things better. They are perfectly content letting unelected bureaucrats run our state. How can we trust their motives on something like cap and trade – a scheme that they themselves admit is a tax and will increase gas costs?

Columnist Steven Greenhut (R Street): “Cap-and-trade passage is about raising taxes, divvying up the spoils”

Victorville Daily Press Editorial: Our View: Cap and trade or tax and deceive?

Letter from Congressmen McClintock, McCarthy, Calvert, and Nunes: “…vote no on cap-and-trade legislation that increases taxes and wasteful spending.”

Letter from Senate Republican Caucus to Governor Brown.

How much will cap and trade, coupled with the gas tax, cost? Calculate it here.

Big Industry vs. Small Business

It was big business interest groups that worked to push this bill through, not small businesses.

The National Federation of Independent Business (NFIB), which represents small to mid-size business owners, opposed AB 398, saying: “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. We should be doing everything in our power to lower the cost of doing business and the cost of living in this state, but AB 398 and AB 617 double down on bad environmental policy and make us even less competitive for good-paying jobs.”

The end result is that while industry and big business were able to carve out a deal they feel works for them, small businesses and families will get stuck with paying most of the costs. I want to help all businesses in California thrive, from those that employ thousands to the mom-and-pop shop on the street corner. Unfortunately, AB 398 hurts ordinary Californians.

Ironically, many of the industries that lined up in support have historically been opposed to the state’s costly climate programs. Rather than play to win, they decided to play to lose by ceding victory in order to claim a less stinging defeat. One comment made was that they chose the lesser of two evils. At end of day, using that analogy, they still chose evil.

Reason.com: Crony Capitalism on Display in California's Cap-and-Trade Re-Authorization”

Further empowers unelected bureaucrats

Governor Brown and Democrat leaders threatened that if the legislature did not pass this bill and extend cap and trade, the unelected Air Resources Board would implement more stringent regulations that would drive up the cost of gas even higher than the projected 73 cents per gallon.

However, in making their case, the governor and Democratic leaders admit they do not have confidence in their appointed bureaucrats at the ARB to enact regulations that won’t destroy our state’s economy. If this is such a great concern, why not pass legislation to restrict the ARB’s authority?

Why give the ARB even more power to draft the regulations that will implement this new scheme? By giving the ARB such wide latitude, AB 398 trusts unelected and unaccountable Sacramento bureaucrats with looking after our best interests.

The Legislature is unable to modify any of the proposed regulations as they are being prepared and this bill empowers the ARB to determine the floor and ceiling price of the allowances being sold, effectively controlling the price we pay for everyday items. This will give that agency enormous power over our pocketbook and our state’s economy.

Bailing out High-Speed Rail 

This cap-and-trade debate has little to do with the environment and everything to do with making sure Democrats’ government programs like high-speed rail get more funding.

That project is an environmental fraud that will actually increase greenhouse gases for decades to come, and is currently $42 billion short of the money needed to finish. 

Southern California News Group Columnist Susan Shelley: “Cap and trade is about the money, not the climate”

Wall Street Journal Editorial: California’s Climate Cap and Spend