California State Legislature OKs Cap and Trade, and a Hidden Gas Tax

California State Legislature OKs Cap and Trade, and a Hidden Gas Tax

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Robert Petrosyan, Fiscal Policy Senior Editor

The California State Senate voted today to pass a controversial cap and trade plan on a largely party line vote. All 27 of the chamber’s Democrats voted for it, as well as Republican Senator Tom Berryhill of Modesto, with the rest of the Senate GOP in opposition.

This bill was established due to the expiration of the current cap and trade plan already in place in the state of California. Leading proponents of this bill include Governor Jerry Brown, Senate Democratic leader Kevin De Leon, and billionaire environmentalist Tom Steyer. Opposition to this bill came from Republicans and business interests, and there is even some opposition from environmentalist groups who don’t believe this bill goes far enough.

The bill, AB 398, targets an 80 percent reduction in greenhouse gases by the year 2050. It uses a cap and trade system to achieve this goal, by setting a common cap, and requiring factories to apply for pollution permits (or carbon credits), which they can trade on a carbon market.

A related bill that also recently passed, AB 617, mandated the replacement of outdated technology that causes non-vehicular pollution, and addressed some of the major concerns of the environmental wing of the Democratic Party.

A hidden provision of cap and trade legislation concerns a further increase in the California gas tax. Already, there is heavy controversy over the gas tax increase that occurred earlier this year, which increased the tax by 12 cents per gallon. This controversy has inspired the recall effort of Senator Josh Newman of Fullerton, as well as a proposal to put repeal of the gas tax increase to a referendum.

The cap and trade bill has the potential to raise the gas tax by anywhere from a conservative estimate of 15 cents per gallon to a liberal estimate of 73 cents per gallon, matching or even potentially dwarfing the gas tax increase that already took place. A quarter of the revenues from this tax is expected to go towards funding high speed rail.

California Republican legislators in Congress have pressured fellow Republicans in Sacramento to reject cap and trade, especially ahead of the Assembly vote, where Democrats need at least one Republican vote for the passage of the bill.

Interestingly enough, Senator Josh Newman was one of the yes votes on the cap and trade bill, despite the recall threat in his home district in North Orange County over his gas tax vote, which would play an interesting role in the upcoming recall election.

On the Assembly side, it was thought that Republicans like Catharine Baker of East Bay and Assembly Republican leader Chad Mayes of Yucca Valley, who support cap and trade, would vote yes. Not only did they do so, but they were joined by five other Republicans in the Assembly; Rocky Chavez, Heath Flora, Jordan Cunningham, Devon Mathis and Marc Steinorth. Many of these votes were surprising given that most of them came mainly from conservative districts away from the coastline.

Two Democrats in swing seats, Sharon Quirk-Silva of Fullerton and Sabrina Cervantes of Riverside, abstained from the vote.

Despite outrage from the Republican grassroots as well as hardline environmentalists, this bill looks destined for easy passage once it reaches Governor Brown’s office.


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