Monday, May 25, 2015
What if cap-and-trade is decapitated?
Columnist Dan Walters points out today that there is a legal challenge to the cap-and-trade system which conceivably could upend the system:
...The Legislature’s budget analyst, Mac Taylor, has opined that the (high-speed rail) project will actually create more climate-changing carbon pollution. Meanwhile, the California High-Speed Rail Authority projects that when completed, circa 2040, the bullet train will reduce automotive travel by scarcely 1 percent of current levels. With such a weak, or even negative, effect on carbon emissions, giving the bullet train such a large chunk of cap-and-trade funds would seem to invite a legal challenge by project opponents. The more immediate issue, however, is a lawsuit filed by the California Chamber of Commerce. The suit says the fees are taxes that violate the state Supreme Court’s ruling on what divides a fee from a tax, which requires a two-thirds legislative vote to be imposed. The case is now pending before the 3rd District Court of Appeal. The Air Resources Board, which created the cap-and-trade program, has filed paperwork postulating that carbon fees are neither taxes nor fees but rather are “incidental” to regulating emissions and not meant to raise revenue. It’s a novel theory and one that departs from the ARB’s previous position...
Full column at http://www.sacbee.com/news/politics-government/dan-walters/article22143216.html
Were the cap-and-trade system to be voided through a legal challenge, there would be an impact on UC that would go beyond the $60 million it is slated to receive directly. The rest of the $2.2 billion (or whatever the total might turn out to be in the future) would also evaporate. There would be a scramble to find alternative funding for the programs now being financed by cap-and-trade. UC's general fund budget, beyond what it gets directly from cap-and-trade, would be at risk in such a scramble. It's not clear that the Committee of Two plan, for example, would survive in such a situation.
Sorry to mess up your Memorial Day weekend with such thoughts.