Why are California Democrats so hard on our working poor?

CLASS WARRIOR: Gov. Brown lobbied state Senate Democrats to approve a $5-billion-a-year boost in gas and vehicle taxes to pay for major road repairs. (AP Photo/Rich Pedroncelli)


When Governor Edmund G. “Jerry” Brown enters his sixteenth year as governor of California this January, he will likely ask his magic mirror which is the bluest state of them all. The mirror will reply “California. It’s so obvious, why do you even ask, you silly governor?”

Democrats in Sacramento hold more than two-thirds of the seats in both houses of the legislature, and no Republican has won a statewide office since 2006. Although Jerry Brown governed in split terms (1974-1982 and 2010-2018), the legislature was majority Democrat long before Brown took office. Since then, Republicans have held a majority of the Assembly for only two years, and they never controlled the Senate. That’s one-party dominance.

To prove their power, Democrats recently adopted a $5 billion gas tax increase, declared California a “sanctuary state” in defiance of the Republican president, and extended the unique cap-and-trade law, which requires California business to pay billions more in taxes. They did it, they acknowledged, in order to display California’s leadership, as a lesson to other states in how to control the global climate.

And they did all this after making permanent the formerly “temporary” highest personal income tax rate in the nation.

The mirror does not lie; California is the bluest state of them all. Jerry Brown should be proud.

Why, then, in this bluest of states does the little guy suffer so much? The Democrats’ narrative is, and has always been, that they are the champions for the underprivileged. Yet California has the highest poverty rate, the highest homeless rate, the worst schools for underprivileged kids, the worst conditions for working-class commuters, and the least opportunity for the working class of any state in the nation. What gives?

According to the United States Census, when the actual cost of living here is taken into account, California has the highest poverty in the nation—20.6% in 2016.[1] California leads the nation in homelessness with 118,142, according to HUD’s 2016 Annual Homelessness Assessment Report. Although New York is a close second at 86,352, the next three in line are far behind those two—Florida (33,559), Washington (20,827) and Massachusetts (19,608).[2] With all this poverty, it should be no surprise that California has the highest number of people on welfare, but according to the San Diego Union Tribune, some may be surprised to learn that 34% of the nation’s welfare recipients live in California, while only 12% of the U.S. population lives here.[3]

Not only are there more poor people in California, but life is harder on the poor and working class here than in other states. Several have pointed out that energy costs in California are much higher than in any other state, and the burden of these high costs falls disproportionately on the poor and working class.[4] Energy for transportation is more expensive than other states not only because of environmental policies handed down by Sacramento but also because of heavy taxation on gasoline. After adopting a $5 billion gas tax increase this year, Sacramento renewed cap-and-trade, which will impose its heavy taxes on business and will be passed on to consumers of a variety of products, including gasoline. These increasing costs have not yet been fully felt at the pump, but when they are, they will be regressive—disproportionally impactful on the poor and working class. This is because this demographic is compelled to commute longer distances by reason of policies that have made housing in California among the most expensive in the nation. Since the wealthy may choose where they live, they may commute less, costing them less at the pump.

There are other ways that high-energy costs brought on by California’s blue state policies hurt the poor. For example, the poor tend to use energy less efficiently than the wealthy, and they use a larger percentage of their incomes for energy, often causing what is called “energy poverty,” where a family must choose between heating their home and eating a nourishing meal.[5]

In a groundbreaking 2015 study,[6] Jonathan Lesser of the Manhattan Institute demonstrated that California is exacerbating this problem through poor choices in its energy, environmental and housing policies.

First, as others have pointed out, energy prices in California are the highest in the nation and continue to rise due to single-focus policies that can be reversed if Sacramento chooses to change them. Second, this rise in energy cost has a disproportionate impact on certain counties such as California’s inland and Central Valley regions because summer electricity consumption is highest there. The impact of this energy tax is regressive, Lesser says, because household incomes in those regions are the lowest; in other words, the poor people live in the most unpleasant places, where air conditioning is needed the most. The more pleasant places, along California’s coast, are reserved for the wealthy through housing policies that keep prices sky high. Sacramento could change those policies if they wished, but very few new homes, relatively speaking, have been built in the most desired areas since Jerry Brown first became governor. Third, according to Lesser, as a consequence of these policies, “[i]n 2012, nearly 1 million California households faced ‘energy poverty’,” and this figure will most certainly go up unless something is done to change the upward trend in energy pricing crossing with the upward trend in energy use by the poor. Lesser provides specific suggestions for policy changes, but none were implemented by Sacramento.

Public education is another area that the poor and working class depend upon more than other segments of the population. In California, you are stuck with the school in your zip code, but for people of means, there is always private school. A recent report ranked California tenth worst in the nation overall in public school performance.[7] When we focus on the schools most likely to be charged with educating California’s poor and working class, however, we quickly learn that the achievement gap remains a living misery for our state’s poor. The recently released Assessment of Student Performance and Progress provides only two performance scores of substance, English and language arts (which means knowing how to read) and math. Scores are divided into four categories, two that meet or exceed acceptable standards and two that do not. In the inner cities where public schools are operated by the Oakland, Los Angeles and Santa Ana Unified School Districts, the following percentage of students met or exceeded the standard for language arts, respectively: 31.86%, 38.55% and 27.80%. In that same order, students meeting or exceeding the standard for math were 25.50%, 29.86% and 22.41%. So our bluest state does not care enough to teach even 60% of our poorest kids how to read or 70% to do math.

So do Republicans have the right to be smug? No way. Republicans have let down the poor just as much as Democrats in Sacramento because they have done nothing to save them. It is not too late for the GOP, however. It is time to step up and become champions of the poor and working class.

Where has the GOP been? Instead of stepping up as champions for the poor, who have been miserable under blue state policies for a very long time, Republicans spend all their time fighting among themselves about any issue they disagree about. A key requirement for admission to the GOP seems to be that one must have a talent for being distracted by issues that divide the party at the expense of issues that could unite it. In this case, the misery of the poor and working class has essentially been ignored by Republicans even though free market policies are ideally suited as the best solution to the oppressive policies that have been in place for so long.[8] Not only would this issue unite the party, but it would provide the GOP an opportunity to do something good in the process.

Here is my solution for Republicans: forget about the rich. They can take care of themselves. And stop fighting. If you have a serious disagreement, table the issue, and campaign on something you agree on. Unfurl a banner that says, “I AM THE CHAMPION OF THE POOR AND WORKING CLASS.” Then get to work to prove it because no one will believe you at first. The poor and working class need a champion; Democrats so far have not been able to reverse course. Come on, GOP, find your heart.

Robert Loewen is chairman of the board of the California Policy Center. 





[4] E.g. ; ; ;

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[8] Arthur C. Brooks, The Conservative Heart, How to Build a Fairer, Happier, and More Prosperous America. According to Brooks, conservatives are natural champions of the poor when they advocate free market principles; he does not believe that conservatives need to become “center-left” in order to advocate for the poor and working class.


Environmentalism Provides Moral Cover for New Taxes to Fund Pensions

Government Created Energy Blackouts Coming to a City Near You

Most countries around the world think that it’s a good thing to have cheap energy. But in California, we have plenty of cheap energy available, just not the political will to access it.

California depends on natural gas-driven turbines and hydroelectric generators to provide just 38 percent of its oil needs. The state imports 12 percent of its oil from Alaska, and another 50 percent from foreign nations, relying heavily on Canada.

So why are California’s utilities warning of potential rolling blackouts again?

It’s political. And it’s corrupt.

Highest Electricity Rates = Less Power in CA

California’s natural gas shale formation is one of the largest in the world. And, California has been a pioneer in renewable energy, albeit still unreliable and unproven. Yet warnings are already coming that Californians may have rolling blackouts this summer. While California sits on one of the largest known deposits of recoverable oil and gas, production is falling steadily, as the state ignores its vast onshore and offshore deposits, which are fully accessible through conventional and hydraulic fracturing technologies.

This is one reason California electricity costs more than twice the national median –  thanks to a government-created shortage.

Another reason is that the California Public Utilities Commission, the state’s energy “regulator,” has an historic dubious relationship with Wall Street, making promises to keep the profits higher of the state’s publicly held utilities, than utility profits elsewhere. Those profits come out of ratepayers’ pockets. “You’re ego is writing checks you’re body can’t cash,” the famous quote from the movie Top Gun says.

$5 Billion Cover-Up at San Onofre

Another of the problem areas is the California Public Utilities Commission $5 billion cover up and scandal over the 2012 closure of the San Onofre Nuclear Generating Station, due to the failure of the steam generators. San Diego attorneys Mike Aguirre and Mia Severson exposed the attempt to make the public pay big for utility and regulatory executives’ mistakes at the failed San Onofre nuclear power plant.

20160613-CPC-GrimesSan Onofre could have operated for additional decades
if it weren’t for corruption and mismanagement.

Southern California Edison executives purchased new steam generators from Mitsubishi, but were warned that they were bigger and run hotter, and could fail. SCE executives purchased and installed the generators anyway, knowing of a flaw in the generator design, according to records. Built to last 40 years, the generators at San Onofre failed after 2 years. And, the generators’ cost had not yet been included in rates. So SCE was faced with broken generators they could not charge ratepayers for.

then-PUC President Michael Peevey, and executives of Southern California Edison colluded in secret to saddle ratepayers with $3.3 billion of the $5 billion shutdown cost. The $5 billion recovery settlement was negotiated in secret in Poland, away from prying eyes and open records laws in California.

Blackouts coming…

The state is awash in ultra cheap natural gas, yet in California, our corrupt government finds a way to create an energy shortage, and charge rate payers the highest rates in the country.

“State officials warn that Southern California could face as many as 14 days of scheduled blackouts this summer because of depleted reserves of natural gas caused by the massive leak in Aliso Canyon,” the Los Angeles Times warned in April. The LA Times neglected to mention that California ratepayers do have options, but its politicians have no will. The state sits on one of the largest known deposits of recoverable oil and gas — the Monterey Shale, a 1,700 square mile oil-bearing shale formation primarily in the San Joaquin Valley, which contains an estimated 15 billion barrels of oil. The Times article quoted Bill Powers, of Powers Engineering in San Diego, who said the utility’s pipeline system has not exceeded its capacity of 3.8 billion cubic feet per day during summer in the last 10 years, thus the concern of blackouts is without merit. “It is crying wolf for state agencies to be implying blackouts from a lack of gas, especially from a lack of gas in the summer time,” Powers said.

The Monterey Shale formation is estimated to be several times bigger than the Bakken Shale formation, currently delivering a record economic boom to North Dakota. But even as the fourth-largest oil producing state in the country, oil and gas production has been steadily declining here. Instead, California lawmakers turned their attention to wind and solar, and other types of alternative energy. The state has been only focused on implementing the Renewable Portfolio Standard, passed in 2011, which requires the state to be using 33 percent renewable energy by 2020.

A University of Southern California study, “Powering California: The Monterey Shale & California’s Economic Future,” looked at the development of the vast energy resource beneath the San Joaquin Valley known as the Monterey Shale. It found that hydraulic fracturing could create 512,000 to 2.8 million new jobs, personal income growth of $40.6 billion to $222.3 billion, additional local and state government revenues from $4.5 billion to $24.6 billion, and an increase in state GDP by 2.6 percent to 14.3 percent on a per-person basis.

It’s Not Easy Being Green

California politicians have gloated over being the first state to enact such aggressive green energy and greenhouse gas busting policy, but have yet to produce any proof that these oppressive and business-killing laws have had any “green” results.

All while they ignore that natural gas is clean, less expensive to extract, natural and abundant. It wasn’t that long ago that natural gas used to be the left’s preferred alternative to all other “dirty fuels.” But as the oil and gas industry found better, more affordable ways to access natural gas, it fell out of favor with emotional, whimsical environmentalists.

The last California Governor blamed for rolling energy blackouts was recalled by voters… hold that thought.

Katy Grimes is senior correspondent for The Flash Report, and a contributor to the Canada Free Press and Legal Insurrection. She is a senior media fellow with the Energy & Environmental Legal Institute, and she serves as president of the Sacramento Taxpayers Association.

Let Them Drive Teslas

Once again, Senate Leader Darrell Steinberg has thumbed his nose at the working class and other Californians of modest means by blocking legislation that would have slightly delayed implementation of carbon emission fees charged to oil companies. The fees are part of the state’s “cap-and-trade” program, California’s one-of-a-kind effort to reduce wordwide carbon emissions. These fees are really taxes that will be passed on to consumers.

California drivers need to brace themselves. We already have the highest gas tax in the nation and this silly scheme will add between 15 and 40 cents a gallon after the first of the year. Bigger increases are a near certainty after that.

The effort to postpone the harm to citizen taxpayers was no right wing conspiracy. Indeed, its champion was Democratic Assemblyman Henry Perea. He introduced AB 69 to spread the implementation of the new fees over a three-year period to allow those who must buy gasoline more time to adjust to the higher costs. The measure was supported by other moderate Democrats and Republicans but, in a letter to Perea, Steinberg made it clear that he would not allow its consideration by the Senate.

In his letter to Perea, Steinberg paid lip service to the cost of combating carbon emissions, but added “the cost of doing nothing is much greater.” That opinion, however, is not shared by the rest of the civilized world. Virtually all other nations have backed off their aggressive “global warming” policies. Australia is but the most recent country to abandon carbon taxes because of the “costs to households.”

Steinberg’s refusal to recognize the needs and problems of average state residents is typical of majority thinking around Sacramento. Steinberg and his colleagues would do well to emulate gubernatorial candidate Neil Kashkari who spent a week in Fresno living on the streets while looking for work. If the Senator and other disconnected legislators would spend a little time in the real world they might learn something.

While the unemployment rate has declined — California still ranks seventh highest in unemployment — areas like the Inland Empire are still suffering with nearly 10 percent out of work. And our state, at 23.8 percent, has the highest poverty rate in all 50 states.

Excepting the moderate Democrats and Republicans who understand the severity of working class problems, the detached political left is mistaken to overlook the millions of low income Californians — many of whom are working, but only part time — who are not happy relying on entitlement programs to get by. Most of these need a car to look for work and, if they’re lucky enough to land a job, a way to get there.

The cost of gasoline is already sky high and the dirty little secret is that 71.29 cents of what the consumer pays per gallon is state and federal tax. The “evil” oil companies’ profits on a gallon are about 7 cents. So, we have to ask – who’s ripping off whom? Having to pay another 40 cents a gallon in additional government imposed taxes is the last thing that those of low and moderate income need right now.

Assemblyman Perea has pleaded for consideration for these folks, only to be rebuffed. Steinberg’s response reminds one of Marie Antoinette’s who, when told that the people were starving because they had no bread, infamously said, “Let them eat cake.” In the case of those fervently devoted to the rigid implementation of California’s cap and trade program, it is as if when told that a low income citizen can no longer afford gasoline for their 1991 Toyota Corolla, they respond with “Let them drive Teslas.” The Tesla, of course, is a taxpayer subsidized electric car that will set the buyer back north of $100,000, which is well beyond the means of those who will be most hurt by this new gas tax.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

California High Speed Rail's Dubious Claims of Environmental Benefits

Editor’s Note: There are dozens of major infrastructure investments that would yield positive economic returns to Californians. Spending over $100 billion on high-speed rail is definitely not one of them. But as Kevin Dayton explains in this article, even the environmental benefits of high speed rail are questionable, if not a complete fabrication. This isn’t Dayton’s first expose of the high speed rail disaster; for more withering details, read “Unions Virtually Alone in Love with California High-Speed Rail,” and “California High-Speed Rail Business Plan Misrepresents Project Labor Agreement.” California’s so-called “bullet train” is a textbook case of crony capitalists and corrupt politicians hiding behind environmentalist rhetoric to justify an epic waste of taxpayers money. And with all the construction projects California really could benefit from, the unions pushing high-speed rail should be ashamed of themselves (ref. “Construction Unions Should Fight for Infrastructure that Helps the Economy.”)

Earth Day 2014 deserves a detailed report on the environmental achievements of California High-Speed Rail, the spine of the mass transit connectivity system that will one day transport you between your own home transit village and another transit village.

And yes, you WILL ride, because artificial government cost barriers will discourage you from driving and flying. A governor and legislators who today are merely students protesting at a University of California campus somewhere will enact such policies between 2028 and 2041.

Trees-for-Shade and Other Schemes for “Net Zero Emissions”

The California High-Speed Rail Authority claims it will achieve “net zero emissions” when it builds its “First Construction Segment” from Madera to Bakersfield by 2017. This program will allegedly allow the Authority to avoid adding to the state’s carbon footprint already imprinted by the lifestyles of Hollywood celebrities and other top Democratic Party campaign contributors.

Net zero emissions means lots of free and discounted stuff to the San Joaquin Valley. The Authority plans to plant 5,000 trees, buy new school buses for school districts, and buy new irrigation pumps and tractors for farmers. (If you’re a farmer in the San Joaquin Valley now forced to buy a pump to extract water from a new deeper well, save your receipts.)

The Authority will also require certain emissions standards for construction equipment, require contractors to recycle 100 percent of concrete and steel from construction and demolition activities, and divert 75 percent of non-hazardous waste from landfills as a way to reduce greenhouse gases. The guy in Pixley with one excavator from the old family business will NOT be working on this project.

Global sea levels are already falling in anticipation of the tree planting program. As required as a condition of 2012 state legislative appropriations, the California High-Speed Rail Authority produced a report in June 2013 entitled “Contribution of the High-Speed Rail Program to Reducing California’s Greenhouse Gas Emission Levels.” Here’s an excerpt:

The Authority is committed to achieving zero net greenhouse gas emissions related to construction activities. While construction activities will generate greenhouse gas emissions, when coupled with the Authority’s strategy, the result is zero net direct construction greenhouse gas emissions. For example, the estimated greenhouse gas emissions associated with construction activities, materials deliveries, and worker travel for Construction Package 1, the first 29-mile construction segment of the high speed-rail system from Madera to Fresno, of 30,107 metric tons of CO2e, from 2013 to 2018, would be offset at the start of construction through a tree planting program that the Authority is developing. This multi-faceted forestry program will introduce enough trees into the region where construction is taking place to honor the Authority’s commitment to offset the direct greenhouse gas emissions associated with construction. The program is planned to include urban forestry and tree planting, through regional tree foundations, which compounds greenhouse gas emissions reductions by providing shade and other amenities with tangible local economic benefits. The program could also include providing shade trees to interested home owners

These will be big leafy trees – not tall skinny palm trees like the ones now shunned in the City of Los Angeles Million Trees LA program because palm trees don’t provide enough shade. Already state and local legislators are angling for trees in their districts. (They don’t seem to be thinking about the public costs of irrigating and maintaining those trees, though.)

Some people think this tree-planting program is farcical. Why not just plant 100,000 trees as an emissions offset and skip building the $68 billion high-speed rail line between San Francisco and Los Angeles? And why borrow money via bond sales, use it to buy trees for interested home owners, and then pay the money back with interest over 35 years? Using borrowed money from bond sales to buy iPads might be a better investment.

As another example of offsetting greenhouse gas emissions, the California High-Speed Rail Authority report also touts “an agreement with the California Department of Conservation (DOC) and the Madera and Merced County Farm Bureaus to assist in obtaining farmland conservation easements from willing sellers located near the high-speed rail alignment between Merced and Bakersfield.” This agreement is the result of a 2013 settlement of an environmental lawsuit against the California High-Speed Rail Authority. Less than a month after the California High-Speed Rail Authority released its report citing this agreement, an article in the Fresno Bee reported that the California High-Speed Rail Authority had failed to make the $5 million payment required in the settlement to establish the program.

Everyone Wants Some Cap-and-Trade Money

Everyone loves a windfall, whether it’s the Peace Dividend, the Tobacco Settlement, Facebook IPO tax revenue, or First 5 California. There’s now a new, exciting one in California: Cap-and-Trade auction proceeds, sometimes called “allowances” but more accurately called “taxes.”

Governor Brown has proposed spending $250 million of planet-saving Cap-and-Trade auction proceeds on California High-Speed Rail in his fiscal year 2014-15 state budget and 33% of proceeds in future years. State Senate pro Tem Darrell Steinberg will reportedly counter with a proposed budget that designates about 20% of proceeds for the high-speed train program. Some environmental groups – in particular the Sierra Club – oppose spending Cap and Trade auction proceeds on California High-Speed Rail at this time. Some Democrats agree and think other programs are more worthy.

Everyone wants this money taken from the polluters. At budget subcommittee hearings about spending Cap-and-Trade funds, lobbyists line up to advocate for their organizations and causes to get money or more money from it. Politics will play a role in how much goes to the train.

For the California High-Speed Rail Authority, Cap-and-Trade revenue may be essential to preserve the program. A court has blocked the state from selling Proposition 1A bonds, thereby also jeopardizing the expenditure of federal matching grants for the program. Governor Brown and the California High-Speed Rail Authority have been forced to seek this funding now to keep the high-speed train program moving into its first construction contract.

Is California High-Speed Rail Authority Justified in Getting Cap-and-Trade Money?

In its February 2014 report “The 2014-15 Budget: Cap-and-Trade Auction Revenue Expenditure Plan,” the California Legislative Analyst’s Office (LAO) described Governor Brown’s $250 million Cap-and-Trade proposal for California High-Speed Rail. The report was lukewarm about using Cap-and-Trade auction proceeds for High-Speed Rail:

“Some Outcomes Would Depend on Changes in Behavior. In addition, the amount of greenhouse gas reductions for some proposed programs would depend on changes in behavior that are difficult to predict. For example, the administration assumes that the high-speed rail…proposals would result in some individuals shifting their mode of transportation, resulting in a net reduction in vehicle miles traveled in cars. While such changes might very well occur and could result in net greenhouse gas emission reductions, it would be difficult to predict with precision the likely marginal net greenhouse gas reduction due to these efforts. This uncertainty increases the risk that the administration’s plan would not achieve its maximum potential emission reductions.

Some Reductions Would Likely Occur Beyond 2020. We also find that some proposed activities would not contribute significant greenhouse gas reductions before 2020, which as mentioned above, is the statutory target for reaching 1990 emissions levels. For example, plans for the high-speed rail system indicate that the first phase of the project will not be operational until 2022. Moreover, the construction of the project would actually generate greenhouse gas emissions of 30,000 metric tons over the next several years. The High-Speed Rail Authority plans to offset these emissions with an urban forestry program that proposes to plant thousands of trees in the Central Valley. We also note that High-Speed Rail Authority’s greenhouse gas emission estimates for construction do not include emissions associated with the production of construction materials, which suggests that the amount of emissions requiring mitigation could be much higher than currently planned. Therefore, it is possible that the construction of the Initial Operating Segment may result in a net increase in greenhouse gas emissions, even when accounting for proposed offsets.”

The report also listed several implementation problems of the Governor’s proposed plan to spend Cap-and-Trade auction proceeds.

Will California High-Speed Rail Actually Reduce Greenhouse Gas Emissions?

Don’t abandon construction of that giant sea wall yet, City of Santa Cruz. The hype about California High-Speed Rail saving the planet is compromised when one considers boring things, such as cement production for civil construction and the accuracy of ridership prediction models.

In the fall of 2010, two experts in Civil and Environmental Engineering at the University of California, Berkeley published a report entitled “Life-Cycle Environmental Assessment of California High Speed Rail.” This report suggested that claims of major reductions in greenhouse gas emissions because of California High-Speed Rail might be unfounded.

“Taking life-cycle and ridership uncertainty into account can yield drastically different estimates about the energy efficiency of different transportation modes…The life-cycle inventory for high-speed rail shows that accounting for infrastructure construction and electricity production adds 40 percent to the energy consumed by the trains’ operations alone…Greenhouse gas emissions increase by about 15 percent, primarily because of the concrete used in construction – half a kilogram of CO2 is emitted for every kilogram of cement produced. Infrastructure construction will emit roughly 490 million metric tons of greenhouse gases, which are approximately 2 percent of California’s current annual emissions. As was the case with the life-cycle inventory of conventional modes, the majority of emissions are released not from the electricity needed to propel the high-speed trains, but from the indirect and supply-chain components.

We can estimate the energy payback period for high-speed rail by comparing the energy used in its construction with the resulting energy savings in its operation, but only by making assumptions about ridership. The payback period evaluates the upfront energy or emission investment in deploying high-speed rail infrastructure against the potential reductions over time. The California High-Speed Rail Authority provides a ridership estimate, but as we noted above, ridership is uncertain, and for an entirely new mode it is very uncertain. Thus California high-speed rail warrants ridership evaluation for both high- and low-ridership scenarios. We consider high ridership as strong adoption of high-speed rail at the expense of auto and air travel, mid-level ridership as moderate adoption of high-speed rail, and low ridership as poor adoption of high-speed rail where travelers favor auto and air. For high ridership scenarios, the energy payback period on the initial investment is eight years, for mid-level ridership 30 years, and never for low ridership (when under-used high-speed rail is coupled with increased utilization of auto and air travel). For greenhouse gas emissions the payback period for rail is six years for high ridership, 70 years for mid-level ridership, and never for low ridership…Thus the California high-speed rail system can reduce greenhouse gas emissions, but may do so only over a very long period, and will do so in exchange for other air emissions.”

Such thinking was never presented in your 4th grade ecology class. Why do things have to be so complicated?

It Could All Be Moot: Cap-and-Trade May Not Survive Lawsuits Anyway

In April 2013, businesses and organizations filed lawsuits (Morning Star Packing Co., et al. v. California Air Resources Board, et al., Case No. 34-2013-80001464 and California Chamber of Commerce, et al. v. California Air Resources Board, et al., Case No. 34-2012-80001313in Sacramento County Superior Court contending that the revenue-generating auction provisions of the California Air Resources Board Cap and Trade regulations are unconstitutional, not authorized under state law, and illegal taxes under Proposition 13 and Proposition 26.

On August 28, 2013, Sacramento County Superior Court judge Timothy M. Frawley sided with the California Air Resources Board. However, he noted that “On balance, the court agrees that the charges are more like traditional regulatory fees than taxes, but it is a close question. Contrary to what [the California Air Resources Board] argues, the charges have some traditional attributes of a tax.”

He also ruled that “Although AB 32 does not explicitly authorize the sale of allowances, it specifically delegates to [the California Air Resources Board]the discretion to adopt a cap-and-trade program and to “design” a system of distribution of emissions could be freely distributed to covered entities or to non-regulated entities, who could then convert the value of the allowances into cash by selling them in the allowance market.”

The plaintiffs have appealed the decision, and the cases are likely to end up at the California Supreme Court. Don’t pay the bills with Cap-and-Trade just yet.

About the Author:  Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at

Cap and Trade Revenue to Fund High Speed Rail?

Liberals and good government advocates frequently decry citizens’ mistrust in government, especially in California. Over the last decade and a half, numerous surveys have confirmed that voters distrust government on several levels including waste, corruption and lack of responsiveness to legitimate public needs.

The recent criminal exploits – both actual and alleged – of three California state senators is going to add fuel to the fire of outrage on the part of voters when it comes to their attitudes about government.

But outright corruption certainly isn’t the only cause of voter angst. Even if conduct falls short of criminality, the “pay to play” culture in Sacramento leaves most voters feeling like penniless souls standing outside of the expensive restaurant (Chez Capital) looking in through the window at all the politically connected fat cats being fed scrumptious meals.

And nothing frustrates knowledgeable voters like being fed outright falsehoods by our elected leaders. On this latter count, let’s add the absurd contention by the Brown Administration that the diversion of $250 million of “cap and trade” revenue to the High Speed Rail project will help California advance its climate change agenda.

For the purpose of this article, let’s assume that anthropogenic climate change is real, meaning that activities of man are having a global impact on weather. (Of course, some of us can still actually distinguish between correlation and causation, but that’s beside the point).

As most people know, California’s response to climate change was AB 32, itself subject of ongoing litigation. At the core of AB 32 is the requirement that Greenhouse Gas (GHG) emissions be reduced 80% of 1990 levels by 2050. The agency charged with implementing AB 32, the California Air Resources Board (CARB) has created a “cap and tax” program that sucks hundreds of millions of dollars out of the private sector economy annually.

But CARB’s program has created a “cache of cash” that has politicians salivating like a Pavlov puppy. Brown’s desperate attempt to fund HSR – even for a short period of time – has him gazing longingly at the money that CARB has generated, supposedly to pay for programs that actually reduce GHGs.

And make no mistake, California’s High Speed Rail project is in trouble. After a series of hostile court rulings and the unwillingness of Congress to throw good money after bad, the most famous boondoggle in California history appears to be hanging on by a thread. But for reasons unknown, Governor Brown has doubled down on the “Train to Nowhere.”

Keeping in mind that everything we’ve been told about the HSR project has been exposed as a lie (from total cost, trip times, availability of revenue from the federal government and private investors, ridership projections, etc.) Brown now heaps on another whopper: HSR is a legitimate project for use of cap and tax funds because it will reduce GHG.

But no one, and we mean no one, actually believes this. The Legislature’s own Legislative Analyst stated that “we find that there is significant uncertainty regarding the degree to which each investment proposed for funding would achieve GHG reductions.” And in a report issued just last week, the Reason Foundation blows the doors off the contention that HSR will reduce GHG emissions. Indeed, the very construction of the project will generate a vast amount of GHG: “High-speed rail (HSR) construction will create substantial GHG. HSR, which is forecasted to begin operations in 2022, cannot reduce GHG emissions before AB32’s 2020 horizon and the project’s construction must [itself] purchase credits through the cap and trade program.”

When pundits wonder why Californians don’t trust government, Brown’s plan to divert a potentially illegal source of revenue to a potentially illegal public works project probably qualifies as Exhibit A.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.