Brown Pushes Cap & Trade Pension Grab

JAN. 11, 2012


Call it pension “entrap and raid” —  instead of environmental “cap and trade.”

Gov. Jerry Brown is floating an idea to divert $1 billion from the auction of pollution credits under California’s Cap and Trade Program to plug a $9 billion gap in the state-operating budget. The $1 billion would go toward funding the huge shortfall in funding pensions.

The Jan. 11 issue of the Los Angeles Times is reporting that Brown’s proposal is enraging business organizations who are calling it a back-door tax.

This comes as no surprise to business groups who sponsored Proposition 26 on the Nov. 2010 ballot to plug a loophole in California’s Cap and Trade law that could have allowed it to impose “fees, levies, charges or revenue allocations” without a supermajority — two thirds — vote of the electorate.  Is it coincidental that, in the official ballot arguments for Prop. 26, the fiscal impact was shown as $1 billion?

Cap and Trade is a mandatory emissions trading program that forces industries to either reduce pollution or buy pollution credits from low polluting industries that have credits to sell.  The first auction, scheduled for August 2012, is coincidentally estimated to raise $1 billion.  The monies confiscated from businesses would be used to create green “jobs and deliver public health, economic and environmental benefits.”  But now part of those funds are proposed to be diverted to be put into the state general fund, which Prop 26. forbids.

Tax Farming?

The governor’s proposal confirms suspicions of critics that Cap and Trade is nothing but a “tax farming” scheme with little net environmental benefit.  Tax farming was a system used in ancient Persia, Egypt, Rome and Greece of outsourcing taxation to “tax farmers,” who bid at auction for the contract rights to collect a particular tax and make money doing so.

Under California’s Cap and Trade law, it will also be mandatory for municipal electricity and water providers to buy pollution credits.  This would result in a tax on utility rates.  Electricity and water ratepayers could end up paying for state pensions in their energy and water bills.

Brown’s proposal seems to be an action of desperation after State Controller John Chiang announced that state revenues for December fell $1.4 billion under the state’s projections.  A revenue gap of $2.5 billion has grown since the state budget was adopted in June 2011.

Quoted in the LA Times, Jim Metropulos, a lobbyist for the Sierra Club, stated that perhaps Cap and Trade auction receipts could be used to “backfill” existing state environmental programs.  These funds conceivably could be used to free up other general fund monies for other purposes.  But California’s Cap and Trade Law –AB 32, the Global Warming Solutions Act of 2006 — was not meant to be a way to partly backfill the state treasury.

A Trial Balloon

Brown’s proposal is apparently what is called a “trial balloon” in politics.  William Safire’s Political Dictionary defines a trial balloon as “a testing of public reaction by suggestion of an idea.”

Business groups are already saying they will legally challenge any such proposal to divert cap and trade funds to the state general fund.

Brown’s trial balloon may not fly with voters who are facing $6 billion in higher annual electricity costs due to the imposition of California’s new Green Power law.

Brown has yet to float a trial balloon on many of the recommendations of the State Legislative Analyst’s Office on where to cut state government, including $3.5 billion in annual tax credits the LAO says “are not achieving their stated purpose.”

It remains to be seen whether Brown’s trial balloon will stay afloat or will plummet back to mother earth.



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  1. CalWatchdog
    CalWatchdog Author 11 January, 2012, 09:23

    Arnold told us that AB 32 would end global warming and provide millions of new jobs for California. It turns out to be just another scam to fund the bloated pensions of pampered government shirkers.

    — John Seiler

    Reply this comment
  2. Beelzebub
    Beelzebub 11 January, 2012, 11:04

    Awhile back So Cal Edison asked the PUC to approve a rate increase on our electric bills to specifically cover the losses that their pension fund incurred during the economic meltdown. So they bet the farm on risky investments to keep those big ass pensions rolling in – lost – so now instead of cutting back on their pensions to compensate for their bad bets – they want the ratepayors to make their bad bets good. That’s like handing a gambling addict $10,000 – sending him to Vegas – and indemnifying him against all losses.

    Maybe one of you guys can check with So Cal Edison and find out whether that specific rate increase was ever implemented. I know that they held public hearings on it.

    Reply this comment
  3. Bob
    Bob 11 January, 2012, 12:24

    I’ve always referred to it as Cap-n-Tax because that is exactly what it is.

    It has nothing to do with the environment or being “green” but has always been about enriching corrupt politicians and their cronies and an excuse for politicians to get ever more control over our lives.

    Reply this comment
  4. PJ
    PJ 11 January, 2012, 13:12

    The Gas Co. also has a new “fee” to help “poor people” enjoy lower gas rates. Who keeps track of these funds run by these tax farmers…er, utilities? I would guess many dollars go into their general fund as well.

    Reply this comment
  5. Beelzebub
    Beelzebub 11 January, 2012, 13:43

    “The Gas Co. also has a new “fee” to help “poor people” enjoy lower gas rates”

    I didn’t realize that but you’re correct. It’s called the “CARE Public Purpose Surcharge”. It was over 4% of my bill. How do they always sneak this crap by us??? And I stay pretty current with the news. Even I didn’t know about it. What else are they sneaking by us??? Where’s the mainstream media???

    But I would rather help the poor keep their homes heated in the winter than backstop the investment losses for the pension fund of the So Cal Edison turdballs.

    Imagine calling up your 401-K investment manager and demanding all your investment losses from the 2008 economic meltdown get reimbursed!!! 😀

    All you would hear on the other end of the line is howling laughter!!!

    Reply this comment
  6. eck
    eck 11 January, 2012, 18:18

    Wayne, no, no, no! “either reduce pollution or buy pollution credits”. CO2 is NOT a pollutant! In, fact, essential to life. There is NO evidence whatsoever that more of it is harmful. The whole thing is a scam by the anti-human crowd. Please just say CO2 instead of pollution.

    Reply this comment
  7. eck
    eck 11 January, 2012, 18:23

    Hey, Beelz, there’s tons of crap they get by us. I’ve found one really has to monitor various web sites (such as this wonderful one), to find out about it. You’ll NEVER read or hear of it from the “mainstream”.

    Reply this comment
  8. Beelzebub
    Beelzebub 11 January, 2012, 19:12

    “Hey, Beelz, there’s tons of crap they get by us. I’ve found one really has to monitor various web sites (such as this wonderful one), to find out about it. You’ll NEVER read or hear of it from the “mainstream”.

    Yeah, this website is certainly better than most with good in-depth reporting on the scams. But I’m really disappointed that even the CalWatchdog fails to report on all the social and financial damage California sustains as a result of illegal immigration. It’s really difficult to find good reporters who sink their teeth into that topic.

    Reply this comment
  9. queeg
    queeg 12 January, 2012, 09:57

    They actually have seminars in revenue enhancement. You betcha your a target!

    Are the credits taxable or the cap fees tax deductible? Its not play money????

    ROI looks to take a beating…marginal business operations merge with strong players or go bye bye!

    Reply this comment
  10. employed
    employed 3 March, 2012, 00:50

    Most people hate the utilities because of multipal attempts of employment with no success.If you were employed by a major utility non of this gibberish would concern you. FACT!

    Reply this comment

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