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Brown's budget can't count on cap-and-trade revenue, analyst says

February 16, 2012 |  3:07 pm


In another blow to the state budget, the state's Legislative Analyst's Office said Gov. Jerry Brown should not count on $500 million in revenue from California's controversial cap-and-trade emissions control program to help balance the budget. Only one-fifth of that sum could be spent without major hurdles, the nonpartisan office concluded in a report issued Thursday.

The money, to be generated in an auction of permits allowing major polluters to emit greenhouse gases, can legally be spent only on reducing carbon emissions, the analyst's office said.

Brown wants to spend $500 million of the revenues toward plugging holes in the state's general fund. But the Legislative Analyst's Office could identify only $100 million in state programs that those funds could go toward. Spending the money on anything beyond those programs would require a two-thirds vote of the Legislature, which means winning Republican support -- something that has eluded the Democratic governor since his inauguration.

Business groups have argued that the revenues from the auctions -- which could reach as high as $3 billion this year -- should go back to businesses whose costs will be increased by the cap-and-trade program. Environmentalists have other proposals. Brown wants another $500 million to go toward renewable-energy projects.

The Legislative Analyst's Office notes that the state won't know how much cash the auctions generate until the budget process is almost complete. It cautioned against giving the governor a blank check on how to spend it.

"In view of the array of information the Legislature will need to make effective decisions regarding the allocation of the auction revenues, we believe the Legislature should take its time regarding the appropriation of these funds," the report said.


Will cap-and-trade work?

Governor's cap-and-trade plan angers business

California cap-and-trade money should be spent carefully

-- Nicholas Riccardi in Sacramento

Photo: California's cap-and-trade program is expected to generate considerable revenue by making it more expensive for facilities such as this Valero refinery in Wilmington to emit carbon dioxide. Credit: Christina House / Los Angeles Times