Dan Logue, Republican assemblyman from Penn Valley, is a member of the Assembly Budget Committee.

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Viewpoints: Brown's backdoor tax hike is a business shakedown

Published: Monday, Jan. 30, 2012 - 12:00 am | Page 9A
Last Modified: Monday, Jan. 30, 2012 - 5:37 pm

Earlier this month Gov. Jerry Brown released his proposed budget for the 2012-13 fiscal year. The centerpiece of his proposal is to ask voters to approve $35 billion in higher taxes over five years at a time when our unemployment continues to be among the highest in the nation.

Much of the public's attention has focused on this job-killing tax hike, and appropriately so. What may be less known to the public is that the governor wants to spend half a billion dollars from the auction of greenhouse gas emission credits to help balance the budget.

Pursuant to Assembly Bill 32, the state's Global Warming Solutions Act, the California Air Resources Board will be implementing a cap-and-trade system starting in January 2013. The Legislature passed this law in 2006 with the grandiose notion that other states and nations would follow California's lead to fight climate change by imposing their own burdensome regulations and taxes on job creators.

Liberals hoped that by making traditional energy sources and the products made from those sources more expensive, businesses and consumers would quickly switch to "green" energy. It was a nice sentiment, but one rooted in fantasy.

What happened instead was California unilaterally shot itself in the foot. Other states and nations have not followed our lead and even President Barack Obama halted his effort to impose a national version of AB 32. As we face a prolonged recession and high unemployment, imposing a complicated scheme of regulations and taxes will only encourage job creators to leave for friendlier business climates.

Yet the governor is moving full steam ahead with AB 32, with the new twist of using some of the revenues it will raise to pay for the state's past spending mistakes. I believe this is in direct violation of the state constitution and the will of the people.

Under ARB's cap-and-trade system manufacturers, energy producers and other businesses will soon have to pay upwards of $1 billion to buy credits in order to operate in California. Brown has proposed using half of these funds to backfill budget debts to programs in other departments that have little or nothing to do with global warming.

State law says that fees, such as those AB 32 imposes, can only be spent on activities that are closely related to the regulation of a specific business; for example, using restaurant license fees to conduct health inspections.

To ensure that the state only uses fees for their intended purposes, the voters passed Proposition 26 in 2010 to stop the governor and Legislature from raiding those fees to pay for other programs.

Unfortunately, Brown is ignoring the people's voice by pushing ahead with his latest budget scheme. Given that the revenues from the AB 32 cap-and-trade system are expected to grow significantly in future years to as much as $10 billion annually, I am concerned that future politicians will seize those dollars for their pet projects.

With California suffering through the worst economic climate since the Great Depression, the last thing the state should do is hit job creators with a back-door tax increase. That is why I am urging the governor to drop his planned raid of global warming revenues. If he does not, AB 32 will become what we feared in the first place – a scheme to shake down job creators to fund bigger government.

I believe it is essential that the Legislature make job creation its top priority. We need to lift the state out of its economic slump and get people working again. Instead of fleecing businesses to the point that they leave California, Sacramento needs to curb its insatiable appetite and live within its means.

© Copyright The Sacramento Bee. All rights reserved.


Dan Logue, Republican assemblyman from Penn Valley, is a member of the Assembly Budget Committee.

Read more articles by Dan Logue



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