Most financial planners would discourage a family from borrowing more money than they may be able to pay back. The same sound advice would also apply to the state of California and its plan to "loan" $500 million from the Greenhouse Gas Reduction Fund to its general fund.
The problem is that substantial legal questions still surround how that money was "taxed" and taken from Californians, and whether the process should be stopped and the money collected to date refunded.
Until these legal questions are resolved by the courts, in lawsuits filed by the California Chamber of Commerce and the Pacific Legal Foundation, the state should not be spending those funds and certainly not "loaning" the money to the general fund when there is no plan on how to repay the money if it is found to be collected illegally.
The Bee's editorial board said that the money should not be shifted ("State should use carbon funds to cut emissions," June 7). That conclusion missed two larger questions whether any of that money should be spent if there is some chance that it will need to be refunded, and whether the right to collect so-called cap-and-trade fees above the amount needed to fund administrative costs of the project is even legal.
The problem goes back to AB 32, the sweeping and damaging law that allows the cap-and-trade program to move forward. As the measure moved through the legislative process, never was it presented as a way to generate hundreds of millions of dollars in revenue for the state to spend.
If it were intended to be a tax revenue generator for the state, AB 32 would have required a two-thirds vote for passage, as is required for all tax increases.
Instead, AB 32 was passed as a majority vote "fee" bill not a tax increase. This is the crux of the legal challenges now pending in the courts. You can't disguise taxes by calling them fees.
Keep in mind that this is not "free money." It was taken from Californians, and California's working families are paying for this in higher energy and utility costs and higher costs for almost every product we use. The state should not be spending money that may have been illegally taken from Californians.
John Kabateck is the executive director of National Federation of Independent Business/California, a member of Californians Against Higher Taxes. This commentary was modified from the original to clarify it is the Pacific Legal Foundation that has joined the California Chamber in its lawsuit.