​(July 11, 2011) Legislation that will impose a climate change tax increase passed the Assembly Natural Resources Committee recently.

The California Chamber of Commerce opposes “job killer” bill SB 535 (De León; D-Los Angeles), which increases costs and discourages job growth by implementing unlimited fees and taxes under a cap-and-trade system.

The bill seeks to establish the California Communities Healthy Air Revitalization Fund (CalCHART) and dedicate revenues from the Air Pollution Control Fund (pursuant to AB 32, the Global Warming Solutions Act of 2006) to fund climate change programs for selected “most impacted and disadvantaged” communities in California.

No Scientific Justification

In late 2010, the California Air Resources Board (ARB) completed a Co-Pollutant Emissions Assessment, an analysis of the impacts of cap-and-trade implementation in four communities. The assessment concluded that the cap-and-trade program will produce no increases in criteria pollutants or air toxics, which are the emissions that have a direct effect on public health in those communities.

This means there is no evidence that the communities SB 535 cites will be harmed due to the implementation of a cap-and-trade program.

Administrative Funds

SB 535 grants the ARB authority to raise revenues through a fee to cover the costs of administering the program and for no other purpose. Use of the revenues proposed by SB 535, however, would require additional authority granted by the Legislature or voters. If the revenues raised and spent by the cap-and-trade program are a tax and not a legal fee, a two-thirds vote will be required.

Furthermore, the bill grants up to 5% of the monies allocated to the CalCHART Fund to be used for administrative purposes. The ARB already has the authority, however, to collect AB 32 administrative fees—an additional 5% of funds are not needed to administer the program. This is unfair double-dipping at the expense of business.

Premature Measure

The CalChamber is pointing out that because the ARB has not determined the appropriate use of revenues for other program purposes, SB 535 is a premature measure. The cap-and-trade market will not start until January 1, 2013, so it is unknown how much revenue the ARB will raise or how much revenue will be needed to meet AB 32 emission reduction goals, and to mitigate unintended and harmful consequences of the program. SB 535 would unjustifiably divert funds from these purposes.

Key Vote

SB 535 passed Assembly Natural Resources on a party-line vote of 6-3 on June 27:

Ayes: Brownley (D-Santa Monica), Chesbro (D-North Coast), Dickinson (D-Sacramento), Hill (D-San Mateo), Monning (D-Carmel), Skinner (D-Berkeley).

Noes: Grove (R-Bakersfield), Halderman (R-Fresno), Knight (R-Antelope Valley).

Action Needed

SB 535 will be considered next by the Assembly Appropriations Committee; no hearing date has been set.

Contact your Assembly representatives and urge them to oppose SB 535.

Staff Contact: Brenda M. Coleman