Gov. Brown’s rewritten budget borrows $500 million from California’s cap-and-trade auctions and diverts the money for use in other state programs – a move that drew immediate fire from clean-air advocates.
The administration said the $500 million represents a one-time loan and will be paid back, with interest. Tapping the money was proper, the administration said, because the state needs more time to set up programs to coordinate the investments of the auction proceeds and nobody can predict how much the auctions will raise in the future.
The agencies need “further time to design and develop their programs to ensure that when the programs receive funds they will further the purposes of (the law) and maximize long term greenhouse gas reductions,” the administration wrote in paperwork accompanying the revised budget, which was released Tuesday. The budget, which must be approved by the Legislature, reflects income tax revenue collected by the April 15 deadline.
“The loan is also fiscally prudent, particularly during this initial stage of program implementation, as the amount of auction proceeds that will be generated in 2013-14 is unknown. Loaning these proceeds will not interfere with the objectives of the three year investment plan or AB 32 because it is short-term and the monies will be repaid with interest when necessary to meet the needs of the Fund,” the Department of Finance noted.
The auctions were created by AB 32, California’s landmark law to curb greenhouse gas emissions. Businesses and others can buy, sell or trade credits allowing them to stay in operation as they gradually choke off greenhouse gases to meet a 2020 deadline, which requires carbon emissions to be cut to their 1990 levels.
The money from the two auctions – one last fall, the other earlier this year — is supposed to be used to further the goals of the law, which was signed seven years ago by former Gov. Arnold Schwarzenegger.
But Gov. Brown’s revised budget takes the money from Greenhouse Gas Reduction Fund and puts it instead into the General Fund, the state’s main coffer of tax revenues, said Bill Magavern of the Coalition for Clean Air. The move means the money won’t get to areas heavily impacted by pollution and carbon emissions, as envisioned by laws authored by the Legislature’s leaders that the governor signed last year.
“They’re loaning it to the General Fund, the money coming out of the cap-and-trade auctions, money that would have reduced greenhouse gas emissions in under-served communities,” Magavern said.
He said his group worked for years to pass legislation “that guarantees a share of the funds go to our most polluted and underserved communities. These important goals are now shunted aside as broken promises. The Governor has spoken of the urgency of addressing our climate crisis, but he has not put his money where his mouth is. It’s important to remember that none of the dollars in the Greenhouse Gas Reduction Fund come from taxes, and they were never intended to go to the General Fund.”
In January, the governor’s original budget described several priorities for investment of auction proceeds, including mass transit, electric vehicles, energy efficiency and sustainable communities.