The county has done business with each of the top 10 recipients of local and state subsidies in California, records show.

Tesla received $20 million in tax breaks and other subsidies to locate a plant in California

The practice is common, although hardly in violation of any rules. But across the state, groups that have received breaks are getting deals to do business, with taxpayers effectively signing two sets of checks to some of the largest, well-capitalized companies in the world.

Oracle received a contract in 2011 for project management software to monitor L.A. County’s $40 million transit and highway expansion project. Oracle has also received $7.5 million in tax breaks and subsidies in the state since 1996.

In the city of San Diego, subsidized vendors included Time Warner, which had a cable internet contract in 2014, as well as software maker Oracle and defense behemoth Northrop Grumman Systems, which had contracts in 2012.

Northrop Grumman has cleaned up there; the $593,388 in city contracts over the past three years came as the company has received $429 million in subsidies statewide.

CalWatchdog compared local government vendor data to the numbers gathered by the subsidy watchdog group Good Jobs First. By the group’s tally, state and local subsidies in California topped $2 billion in recent years, with information focused on the period since 2012 plus some awards back to the mid-‘90s.

The state subsidies list is dominated by heavyweights: Walt Disney, Comcast, Anschutz Company, Viacom, Time Warner, Virgin, Lockheed Martin, Samsung, Northrop Grumman and Oracle.

Most of the top 10 can be found among the Fortune 500, a ranking based on revenues. California taxpayers helped get them there, through breaks, allowances, training allotments and delays on taxation. (Voice of San Diego did a good assessment of California’s many subsidy programs last fall.)

In exchange, the body giving the break, be it the state or a municipality, hopes for employment and tax revenue that will put it ahead of the game. Job creation mandates are sometimes part of the deal — that is, upon the creation of a number of jobs, the subsidy is given. Major corporations have teams that work full-time on such equations.

California ranks lower than most with regard to size and scope on a statewide basis.

“Although California has often been on the losing end of interstate job piracy, the state generally does not offer major state subsidy packages to individual companies,” according to a report by Good Jobs First. “And contrary to the norm, it has only a few programs of any significance.”

Often found near the bottom of rankings for business climate, the state has had a mixed experience with subsidies.

Subsidy programs in Tennessee and Texas were used to woo Nissan and Toyota, once a major part of the state’s proud auto company portfolio, away from California. Those were the highest-profile moves among a number of corporate headquarters defections from California in the past 10 years.

The state recently passed legislation to give $330 million worth of inducements to get the entertainment industry back, after losing business to the growing number of states with film incentive programs.

Even by handing over government contracts to the already-subsidized companies, incentives are a gamble.

The state’s glaring example of unintended consequences has been with Tesla, which in 2010 received a package of incentives worth $20 million when the company took over part of the empty NUMMI auto manufacturing plant in Fremont.

An article at the time by the San Francisco Business Times noted, “Gov. Arnold Schwarzenegger said the deal for NUMMI was made possible by tax incentives and credited Treasurer Bill Lockyer for finding available incentives.”

The party was disrupted in May, when it was revealed that Tesla was benefitting from $4.9 billion in government subsidies across the U.S., including those from California. It is considered by many an outsized allotment for an industry – electric vehicles – that has no solid base at this point.

At the same time, there have been winners.

The California Valley Solar Ranch developed by NRG Energy was granted a property tax break by San Luis Obispo County worth $14 million, and is now performing above expectations, generating up to 4 percent more than the 600,000 kilowatt hours a year that were projected.

Steve Miller can be reached at 517-775-9952 and avalanche50@hotmail.com. His website is www.Avalanche50.com

By Chris Reed

Seven years ago the California Legislature passed AB 32, the Global Warming Solutions Act of 2006, a landmark law forcing California to shift to cleaner-but-costlier forms of energy by 2020 to reduce the emission of the gases believed to cause global warming. The assumption was that, as it had with so many other environmental regulations, the Golden State would inspire the world to follow our lead.

There were cautionary voices. Gov. Arnold Schwarzenegger told lawmakers he wouldn’t sign the bill unless it gave a future governor the option to suspend its enforcement in times of economic distress. This amounted to an acknowledgment of a basic fact: California’s economy would be at risk if the state forced the cost of energy to go higher, requiring businesses to pay more for a large basic budget item than their competitors in rival states and nations. The Golden State needed others to follow our lead for our policy to make economic sense.

But soon after, Schwarzenegger’s legacy hunt revved up, and he saw the opportunity to be Al Gore’s successor as a pin-up of global environmentalists. When California’s economy went into its deepest recession in 70 years, instead of invoking his executive authority to delay AB 32’s implementation, the governor began asserting that AB 32 amounted to a job-creation measure. This was talking point No. 1 of the Schwarzenegger administration for years.

The expects trashed the AB 32 happy talk

To say this was dubious is an understatement of immense proportion. A “peer review” of the California Air Resources Board’s upbeat analysis of AB 32’s economic impact released in late 2008 scorned the report as painting a rosy scenario. A specific warning noted the risks to manufacturing in California because energy played such a huge role in cost of operations.

One of those peer reviewers — Harvard’s Robert Stavins, perhaps the world’s leading environmental economist — shredded the happy talk from the air board (and implicitly from others) in a memorable January 2009 interview with Stephen Moore of the Wall Street Journal.

“None of us knew who the other reviewers were, but we all came up with almost the same conclusion. The report was severely flawed and systematically underestimated costs,” said Stavins, who chaired the U.S. EPA’s economic advisory committee during the Clinton administration.

Stavins asked a common-sense question: If this approach were such a job-creator, why would it have to be imposed on private industry?

But instead of heeding Stavins, his fellow peer-reviewers and common sense, the Los Angeles Times made an extremely curious journalistic decision. In its news pages, it either downplayed the possibility that AB 32 could backfire enormously, or treated the question as hotly debated, with experts on both sides. On its editorial pages, it usually treated the will-AB-32-backfire thesis as partisan rhetoric, exaggerated or flat-out wrong.

Never was this more evident than in its coverage of Proposition 23, the 2010 state ballot measure that sought to roll back AB 32 until unemployment was 5.5 percent or less for four quarters in a row.

The savaging of Prop. 23

Prop. 23 amounted to a straightforward extension of economists’ no-duh critique: Higher energy costs put California at a competitive disadvantage, and we shouldn’t want to dig ourselves a bigger hole with unemployment at the time already above 12 percent — far higher than the national rate.

But to the editorial board of the Los Angeles Times, Prop. 23 was nothing more than psycho Texas-style policy extremism. This is from the LAT’s Sept. 28, 2010 editorial:

“In 2006, taking a brief hiatus from the usual Sacramento gridlock, the Legislature passed and Gov. Arnold Schwarzenegger signed AB 32, a pioneering law designed to reduce California’s greenhouse gas emissions to 1990 levels by 2020. This year, a proposition that aims to kill the law was put on the Nov. 2 ballot by two Texas oil companies with a lot at stake. The cynical, misleading argument the companies are using to make their case is that AB 32 will deter job growth at a critical moment in the state’s economic recovery.

“Proposition 23 would suspend AB 32 until the state’s unemployment rate falls to 5.5% or below for four consecutive quarters. Backers insist that this wouldn’t negate the law because the rate is achievable — joblessness hit that mark just four years ago. Yet a global recession, which had nothing to do with California’s environmental standards, caused statewide unemployment to skyrocket to 12.4%, and it will take many years to recover from such a severe economic blow. Because meeting AB 32’s 2020 deadline requires immediate action, delaying implementation by even a year could render its goal impossible.

“Of course, the question of most concern to voters is whether AB 32 would worsen joblessness and slow the state’s recovery. Supporters and opponents of Proposition 23 draw on studies that reach opposite conclusions; the yes side says AB 32 would cost the state 1 million jobs, while the no side says it has already led to the creation of 500,000. We’re not convinced by either. The economic impact of AB 32 will depend on how it’s implemented by regulators, as well as variables outside anyone’s control or ability to forecast.”

Higher energy costs aren’t necessarily bad, you see, if you have enlightened regulators.

The Times channels Emily Litella: ‘Never mind.’

Now comes a moment that simultaneously brings to mind George Orwell, Emily Litella and the ninth season of “Dallas”: “We’ve always been at war with Eastasia.” “Never mind.” It was all a dream.

In Monday’s Los Angeles Times, the paper gave high-profile play to an 1,100-word analysis of AB 32 by reporter Anthony York. Six years and six months after the passage of AB 32, and four years and four months after the release of the peer review savaging the happy talk about AB 32, York treated as a given that the critique of Robert Stavins — and of Prop. 23 supporters — was accurate.

“When Gov. Jerry Brown called on his fellow governors at a conference in Washington last week to embrace a California-style pursuit of cleaner air, he was doing more than reinforcing the state’s image as an environmental trailblazer. He was trying to protect its economy.

“Brown needs other states and the federal government to adopt key elements of California’s environmental agenda, such as reaping more energy from renewable sources and capping greenhouse gas emissions, if those programs are to be successful here.

“The state’s aggressive pursuit of environmental goals has provided a new impetus for green jobs and federal subsidies. But the programs are costly to businesses, raising the price of their energy and forcing them to upgrade to cleaner manufacturing technologies.

“If others don’t go green, California could become an outlier, saddling businesses with costly new power while neighboring states continue to use traditional, cheaper energy, experts say. If the efforts under way in California spread to become the new normal, however, all will benefit from economies of scale.

“If more states order power companies to limit their use of fossil fuels, for example, the incentive will grow nationwide for firms to develop cheaper alternatives, leaving California consumers less exposed to spikes in electricity rates.”

Journalistic irresponsibility on an epic (fail) scale

So California’s leaders enacted a law that puts our industries and jobs at sharp risk unless other states copy us, and other states aren’t following us. And the most powerful newspaper in California refuses to acknowledge this basic fact until 78 months after the law was enacted?

Given the economic pain this state has gone through, this isn’t just a minor journalistic faux pas. This is epic in its irresponsibilty.

If reverse Pulitzers were given for coverage of a major issue, the Los Angeles Times’ coverage of AB 32 wouldn’t just be the winner. It would be recalled as the 1927 New York Yankees or the 1996 Chicago Bulls of horrible journalism.

Or, as the kids say, epic fail.

By Chris Reed

Trying to preserve and help create manufacturing jobs should be a primary goal of a party that bills itself as being about social justice. Manufacturing jobs often offer middle-class wages, but don’t require college degrees — providing a great way up the ladder for disadvantaged minorities. Shouldn’t this be catnip for Democrats? One would think.

So what is absolutely crucial to manufacturers? The cost of energy. This is why one of the academics who peer-reviewed an air board study on the economic effects of AB 32 gave it low marks for downplaying what would happen as California forced a broad shift to cleaner-but-costlier energy. Here’s what UCLA economist Matthew Kahn had to say:

“According to page 39 of the Scoping Plan, there are 1.5 million people employed in manufacturing in California. Thus, a key issue is how this sector will be affected by AB 32 regulation. The results reported in Table II-8 claim that manufacturing employment will grow by .4% because of AB 32 regulation. Given that electricity prices are expected to rise by 14%, this is a surprising finding. The micro-econometrics literature has concluded that increased energy prices retards manufacturing employment growth. The manufacturing results reported here contradict the findings from the micro-econometric literature on firm locational and employment choice (see Carlton 1983 and Davis and Haltiwanger 2001 …). In his detailed study of the Fabricated Plastic Products Industry (SIC 3079), Communications Transmitting Equipment (SIC 3662), and Electronic Components (SIC 3679), Carlton demonstrates the importance of metropolitan area electricity prices as a factor in attracting job growth. Cities with high electricity prices lose jobs in each of these industries …”

So we are now ramping up AB 32, and surprise, surprise, guess what? Manufacturers are leaving California even as manufacturing rebounds nationally:

“Manufacturing is staging a big comeback in the United States, according to a new U.S. Commerce Department report, but a new state employment report indicates that manufacturing is continuing its years-long slide in California.

“The federal report says that between the start of 2010 and the end of 2012, manufacturing accounted for 500,000 new jobs. …

“Meanwhile, a monthly report on employment in California, also released Friday, shows that government and manufacturing are among the categories to show declines over the past year.

“Manufacturing, once a major component of the California economy, now accounts for less than 9 percent of the state’s non-agricultural payrolls. It shed 11,400 jobs between December 2011 and last month.”

That is from the Sacramento Bee.

Two questions:

1) Now will the California media finally stop buying the goofy spin that higher energy prices are somehow good for the state’s economy?

2) Do you think it bothers greens in West L.A./Brentwood/Malibu and Bay Area one bit that AB 32 is destroying a path to prosperity for the less-educated and their families?

The answer to the first is probably not. Only The New York Times, strangely enough, has reported that AB 32 is risky. The L.A. Times, Sac Bee, Mercury-News, etc.? They are in the green tank.

The answer to the second is of course not. Manufacturing, you see, creates “dirty” jobs. So greens say good riddance. The poor? Let them eat cake.