The biggest scammer in California is about to get 15 years.
That’s not a prison sentence, although it should be. It’s the pending extension of the costly and idiotic “cap and trade” program, a hidden tax on energy that has been raising the cost of electricity, gasoline, diesel fuel and anything made or moved in California for more than 10 years.
The program is run by the unelected California Air Resources Board (CARB) to meet the state’s arbitrary targets for greenhouse gas reduction. It is set to expire in 2030, and if it does, the cost of living in California will come down immediately.
But Gov. Gavin Newsom and the legislature will not let it expire. Instead, they want to renew it through 2045. They’d just prefer that you didn’t hear about it.
So the bill language for the renewal of “cap and trade” is hidden away on the website of the Newsom administration’s Department of Finance. You can find it at dof.ca.gov, under “Trailer Bill Language.” Select “May Revision.” Then scroll down and choose the category named, “Natural Resources and Capital Outlay.” About halfway down the list you’ll see it: “Cap and Invest Extension.”
Newsom has renamed the program from “cap and trade” to “cap and invest.” As you know if you vote in California, “invest” is a term that people in government often use when they really mean “tax increase” or “debt increase” but don’t want to make that too clear.
“Cap and trade” operates exactly like a tax. Money is collected by the state government, deposited in a special fund in the state treasury and spent by the legislature and governor.
Ever since California voters passed Proposition 13 in 1978, tax increases at the state level have required a two-thirds vote in the legislature. However, the law that authorized CARB to create and implement “cap and trade” was passed by only 59% of the Assembly and 58% of the state Senate. Assembly Bill 32, known as the Global Warming Solutions Act, fell short of a two-thirds vote.
AB 32 directed CARB to devise an enforceable method of reducing the state’s total greenhouse gas emissions. CARB adopted regulations that created “cap and trade,” a system of issuing a fixed number of permits, each allowing the emission of one metric ton of greenhouse gases. These “allowances” could be purchased at a state-run auction or bought and sold in a “market,” like stocks or bonds.
The California Chamber of Commerce sued CARB, arguing that requiring companies to purchase “allowances” in order to operate their businesses was an unconstitutional tax that violated the two-thirds vote requirement in Prop. 13.
The Chamber lost that case. A divided Court of Appeal held that the billions of dollars in revenue that CARB collected from selling “allowances” are not taxes, because “participation is voluntary.” The court’s majority said a business remained free “to choose to leave the state.”
Incidentally, refineries are required to buy “allowances” to operate, and two of California’s refineries are leaving the state.
In a dissenting opinion, Justice Harry E. Hull, Jr., said participation was “voluntary” in the same way “California income taxes are voluntary because one need not earn income or live in California.”
But the state Supreme Court declined in 2017 to take up the case, and ever since, California residents have been paying higher prices because of this hidden don’t-call-it-a-tax on refineries, utilities and manufacturers.
What does this program actually accomplish? The new trailer bill language admits that California can’t change the climate: “National and international actions are necessary to fully address the issue of global warming. However, action taken by California to reduce emissions of greenhouse gases will have far-reaching effects by modeling success for other states, the federal government, and other countries, and inspiring them to act.”
On January 1, 2023, Washington became the only other state to implement an economy-wide “cap-and-invest” program. Less than six months later, the Seattle Times reported that Washington’s gas prices were the “highest in the U.S.” UC Berkeley professor Severin Borenstein was invited to explain to state lawmakers why that happened. He told them the cap-and-invest program was raising gas prices. If carbon allowances cost $50 per metric ton, he said, “the price of gasoline goes up about 50 cents per gallon.”
How much do you want to pay to “model” this program to the world? And what happens to the money?
The split of the loot is currently the subject of backroom negotiations, where the discussion will stay until a deal is made. Newsom has said he wants the high-speed rail project to get $1 billion every year through 2045. It currently receives 25% of the money collected from selling “allowances,” more than $6 billion of your don’t-call-it-a-tax dollars so far.
Once the deal is made, the final trailer bill language will be amended into one of the blank bills that lawmakers previously introduced and advanced for this purpose. The final vote will happen 72 hours later, and by the time you hear about it, “cap-and-invest” in all its slush-fund glory will be the law of the land in California through 2045.
Why is this even legal? The people of California don’t have to tolerate hidden taxes on hidden websites, blank bills moving through the legislature as if that’s normal, and higher gasoline prices so we can “model” our useless program to the world. Did you know that Ontario, Canada, adopted a “cap and trade” program but dropped it in 2018? “It was costly, it was ineffective, it was killing jobs, it’s gone today,” said Environment Minister Rod Phillips.
California would instantly become more affordable if the “cap and invest” renewal is called off. Democratic legislative leaders said they wanted to address the affordability issue. This is their chance.
Write Susan@SusanShelley.com and follow her on X @Susan_Shelley