The first Indiana Jones movie opens with our hero taking a gold statue from an ancient temple, only to have his prize stolen from him by a rival archeologist. Poor Indiana Jones, viewers think, he dodged tarantulas, poison darts, and outran a giant boulder, only to have this other guy take the statue away without doing any of the hard work. No one remembers that the statue actually belongs to the Peruvian tribespeople. In 2013, Californians are witnessing an exact allegory with the repeated raiding of the revenues from the carbon price under state law AB32 that should be theirs.
The San Francisco Bay Guardian recently reported that Gov. Jerry Brown plans to borrow $500 million from funds raised by the state's new cap-and-trade program and use the money for general fund purposes in his revised state budget proposal. Environmental justice groups have expressed outrage about the diversion of funds, which they want spent on emission reduction projects, many in disadvantaged communities.
However, this is just the latest in a series of raids on what should be the people's money.
The first raid was the allowance allocation decision during the AB32 rulemaking. The California Air Resources Board (ARB) held dozens of hearings and meetings on allowance allocation between 2006 and 2010, in which they were lobbied heavily by industry. The result was a decision to give 90 percent of the industrial sector allowances to polluting companies for free. Kiss goodbye to 90 percent of the revenue that could have been coming in during this first phase of the program. Instead, polluting companies will see windfall profits, as has been well-documented in the underperforming European emissions trading system. Even so, the permit giveaway did not dissuade the recipients of this largesse (represented by the California Chamber of Commerce) from filing lawsuits against ARB.
The second raid of funds is underway in the State's choice to invest revenues in projects rather than return them as a dividend to California households facing higher prices. The cap-and-trade program is an enclosure of the Commons -- the atmospheric carbon sink -- that is a shared public good. An equal per capita dividend from this income stream would institutionalize the idea that we all share ownership of the Commons together, and that wealth should be distributed to everyone. That idea was persuasive to the California Public Utility Commission, which will return utility sector proceeds to ratepayers, but it has not swayed the governor's office or the legislature, which are being bombarded by interest groups' ideas for how to spend the money.
The governor's investment plan favors groups and agencies promoting sustainable land use and planning, something California clearly needs. But in a state where money is being continually invested in parking structures, new highway lanes, and widening roads, resulting in higher GHGs, is auction revenue the correct source of funds for SB375 activities? Why not divert the funds behind the "brown" transportation projects to SB375 instead, and/or set up a special SB375 fee on high-impact (sprawl) development? True, Prop 26 means such a fee would need a two-thirds majority in the State Legislature, but Democrats now have that majority. Other proposed spending projects can be funded in similar ways, preserving the auction revenues to be returned to the people as an economy-changing, behavior-changing dividend.
In this most recent raid of "borrowing" $500 million from the cap-and-trade program, the governor argues that state agencies need more time to determine how the funds will be used, new programs are not ready yet, and in the meantime, he is putting those funds to use elsewhere. It would not be so easy to shift this money around if it was going back to the people in regular dividend checks. But once the auction revenues are seen as fungible like General Fund dollars, then it becomes all too easy, as was predicted in a July 2009 public comment to ARB: "Competing claims are strong: National debt, education, and liability to elders and veterans. Once politicians see revenues being spent, it will be tempting to "borrow" from those funds."
This is what just happened. The comment continued:
If you spend a large proportion of the money (rather than return it), fossil interests will exploit distributive claims and prevailing distrust of government to destroy the policy within a matter of a few election cycles. The best defense for the policy is to engage those households directly (i.e. provide a dividend).
If such a political attack and populist backlash come next, be on the lookout for a future blog post sequel titled "California and the Temple of Doom."