California's Propositions 23 & 26 Threaten to Undo the State's Environmental Progress
These ballot measures have been sold as job creators and tax cuts, but in fact they would upend California’s landmark environmental legislation and force taxpayers to foot the bill for fees normally covered by polluting companies. No wonder big oil loves them.
California is usually regarded as the country’s leader when it comes to environmental policy. Yet with the potential passage of two propositions on the November ballot, the state’s environmental progress could be lost.
Meet Propositions 23 and 26, “voter initiatives” supported by oil companies such as Valero, Tesoro, and ExxonMobil. The propositions have been sold as job creators and tax cuts, but in fact the measures would upend California’s landmark environmental legislation and force taxpayers to foot the bill for fees normally covered by polluting companies.
Proposition 23, the better known of the two, would effectively terminate the California Global Warming Solutions Act of 2006, or AB 32. That law requires global-warming pollution to be reduced to 1990 levels by 2020, and aims for an 80-percent reduction by mid-century. Reaching those goals would bring the state into compliance with the Kyoto Protocol, which has nearly two hundred international signatories. According to the Union of Concerned Scientists, AB 32 is “the nation’s most comprehensive, economy-wide, global-warming-pollution-reduction program.”
Prop 23 would suspend AB 32 until unemployment in California drops to 5.5 percent for four consecutive financial quarters—an unlikely benchmark, given California’s 12-percent unemployment rate. What’s more, the state’s unemployment rate has dipped below 5.5 percent just three times over the past four decades.
If AB 32 is suspended indefinitely, the effects would extend far beyond California’s borders. With scant environmental legislation on the national agenda, “the real reason [energy companies] want to block AB 32 is that they’re afraid the move to limit emissions and promote venture-capital and alternative-energy firms will catch on in other states,” the Los Angeles Times editorial board argues. “They’re right.”
An even more scathing rebuke came from Governor Arnold Schwarzenegger, no doubt infuriated that one of his biggest legislative accomplishments could be reversed. In a blistering speech he gave to the Commonwealth Club in Santa Clara on September 29, he noted that two-thirds of Californians approve of AB 32, adding: “Does anyone really believe that these companies, out of the goodness of their black-oil hearts, are spending millions and millions of dollars to protect jobs? This is like Eva Braun writing a kosher cookbook. It’s not about jobs.... It’s about their ability to pollute and thus protect their profits.”
AB 32’s supporters argue that the measure will save the state money and jobs. Without AB 32’s regulations, electricity would become 33 percent more expensive in California by the end of the decade, according to University of California Berkeley economist David Roland-Holst. That would, in turn, reduce the gross domestic product by $80 billion—and eliminate half a million jobs. As it stands, with AB 32 in place, California is projected to see $20 billion in GDP growth and add one hundred thousand clean-energy jobs over the next ten years.
Prop 23’s supporters, however, claim that AB 32 will increase the unemployment rate. Not so, says George Schultz, who served as Secretary of State under President Ronald Reagan and is honorary co-chairman of the Californians for Clean Energy and Jobs. Rather, he argues, AB 23’s regulations would increase the number of clean-tech jobs in California, ultimately strengthening state economy.
In their cost calculations, proponents of Prop 23 consistently fail to include the rising price of oil, as well as the price of additional hospital visits and deaths associated with increased pollution. Owing in part to those concerns, opposition to Prop 23 has grown to include AARP, the California Nurses Association, and health-care giant Blue Shield.
As for the claim that AB 32 would seriously harm California’s economy, a study conducted by the Brattle Group determined that AB 32 would result in a marginal cost increase for small businesses. California’s seven hundred thousand small businesses now spend 1.4 percent of their revenues on energy, the study shows. Under AB 32, that figure would rise to 1.7 percent by 2020—but only if small businesses fail to pursue incentives, rebates, and other programs to help them lower their energy costs.
At least the Texas oil companies are doing their part to bolster California’s economy—in the form of millions of dollars’ worth of TV ads. Oil companies alone have spent more than $6.5 million on an ads for the proposition. Together, the Texas oil and chemical companies account for 90 percent of financial support for the proposition. For the moment, the ads seem to be working. A Los Angeles Times/University of Southern California poll released in late September found likely voters evenly split over Prop 23, even though more than two-thirds of those polled called global warming “very” or “somewhat” important to them.
Prop 23 has a sister measure, Proposition 26, whose promotion is also being funded by oil companies. Chevron, ExxonMobil, and others spent $2 million so far to push the proposition. The U.S. Chamber of Commerce has ponied up $1.4 million, mostly from alcohol, tobacco, and soft-drink industries.
Simply put, Prop 26 would amend the California Constitution so that fees currently levied against companies to cover the health and environmental damage caused by their products would be reclassified as “taxes.” Those “taxes,” in turn, would require a two-thirds vote to be passed in the state legislature—not a simply majority, as with fees. As a result, state and local governments would lose billions in revenue—and would face a $1 billion hole in the recently approved state budget.
Prop 26 would also repeal a change in state fuel taxes, which gave California more flexibility on how it could use revenues from gasoline taxes, enabling the state to pay off transportation bonds. Without that flexibility, the state will have had to siphon money from the general fund, which is nearly exhausted.
Environmentalists and other opponents of Prop 26—including the Sierra Club, the American Cancer Society, the AFL-CIO and more—point out that big business is behind the measure. The Los Angeles Times reported that the coalition behind Proposition 26 is similar to the one that backed the Polluter Protection Act, which was defeated in 2000 with the aid of environmental, labor, and consumer-rights groups.
With large corporations supporting so many legislative efforts to turn back the clock —chief among them, repealing the health-care reform legislation and “privatizing” Social Security—California voters need to see Propositions 23 and 26 for what they really are: a reversal of the state’s environmental progress.
Related: Shoddy Work, Shabby Excuses, by Tom Speight