When Gov. Brown and legislative leaders announced their budget agreement at a press conference Tuesday, the tone was victorious: The budget was on time and balanced, and the Legislature had caved on a number of Brown’s more cautious fiscal proposals.
But it was evident the governor still had something of a political Achilles’ heel – his environmental record.
“I want to believe that Jerry Brown is the same as Arnold Schwarzenegger and says, ‘Look there’s no conflict between the environment and the economy,’ Schwarzenegger made that clear, Jerry Brown hasn’t made it as clear,” said Bill Allayaud of the Environmental Working Group. “But perhaps part of his term is tempered by the fact that he inherited a terrible economy, so his prime directive was to get the state budget fixed and get the economy moving, and I don’t think anyone can say he’s done bad job on that.”
He added, “Californians believe that there’s no conflict: they want a good economy and they also want a very protected environment, clean air, clean water, and that comes across in poll after poll. Jerry Brown I think probably understands that but we think there’s some issues with some of the things he’s done.”
Brown’s decision to lend cap-and-trade auction proceeds to the General Fund has drawn pressure from environmentalists, who say the money was intended to go directly to programs to fight greenhouse gases. He also has raised environmentalists’ concerns for his actions on hydraulic fracturing – or “fracking” – as well as his diversion of money from voter-approved Proposition 39. These tensions have pushed Brown into a classic political battle, with the state’s economic needs on one side and the protection of its environmental resources on the other.
First, there was the backlash last month regarding Brown’s cap-and-trade proposal. The administration wants to loan $500 million of the revenue raised by AB 32 auctions to the General Fund, to be paid back when the time is “appropriate,” according to Dave Clegern from the Air Resources Board.
The National Resources Defense Council (NRDC), among other environmental groups, would like to see those funds applied to programs and communities that need them as soon as possible, especially given the improvement of the state’s fiscal condition over the last year, NRDC attorney David Pettit said. The governor’s approach reflects the caution with which he approached this year’s budget, in order to maintain the state’s precarious economic condition and retain an emergency reserve.
That fiscal prudence was the source of many major differences between Brown’s budget policies and those of the Legislature as well.
The Legislature’s nonpartisan fiscal adviser, the Legislative Analyst’s Office, said the requirements of AB 32 could be met simply through the cap piece of the program, but there was an inclination in the Legislature to use at least a portion of those revenues to move programs forward in reducing greenhouse gas emissions. An additional legislative argument was that putting the programs into effect earlier could cut the costs businesses face in capping their emissions. However, Brown pushed for the $500 million loan, saying it allows adequate time to evaluate which programs most efficiently achieve the ends of reducing greenhouse gas emissions, Clegern said.
Beyond the budget, recently passed legislation has drawn scrutiny to Brown’s environmental positions.
The Assembly considered several bills that would have imposed a moratorium on all hydraulic fracturing, known informally as “fracking,” a controversial means of drilling for oil that has been practiced in California for the last half century. The Senate passed SB 4, which would impose heavier regulations on the practice. The Assembly bills have since been rejected, and the Senate-passed bill, which requires a study of the impacts of fracking and public notification, is the sole remaining bill in the Legislature dealing with the issue.
The administration has been careful not to take a position on the merits of hydraulic fracturing, despite pressure from the anti-fracking movement aimed at lawmakers and the governor. At the end of last month, a coalition called Californians Against Fracking marked its official launch with a protest at the governor’s Los Angeles office.
“The governor is realizing we can’t put this all off to be decided and looked at later,” Brian Nowicki of the Center for Biological Diversity said. “It is something that we have to look at now, on the front end, rather than just letting it progress without our constant and complete supervision.”
Department of Conservation Chief Deputy Director Jason Marshall said that there have been no previous problems with hydraulic fracturing but that the Division of Oil, Gas and Geothermal Resources would respond to the need to develop any necessary regulations. Meanwhile Allayaud said that until recently, the Governor prioritized the oil industry over accountability for the agencies that regulate it.
“This agency has played hide the ball for the greater part of two years, and finally, recently, I think DOGGR is coming around, and the governor’s new people I think are more sensitive to public opinion and public awareness,” Allayaud said. “That’s to me the big thing wrong over there, is this agency was basically answering to Chevron and Exxon and all the other oil and gas companies and not to the public.”
However, the administration is simultaneously under pressure from those pro-business interests who argue that a fracking moratorium would threaten the state’s fragile economic position.
“Any cursory examination of the facts supports the decision that moratorium on hydraulic fracturing is uncalled for, unwarranted, and would have been very harmful to the state’s economic future,” said Tupper Hull of the Western States Petroleum Association.
Caught between the competing pressures of expectations to improve the state’s limited fiscal resources and maintain its natural ones, the governor believes he has found a middle ground on at least on one environmental issue.
Proposition 39 was passed last year by voters as a way to increase corporate income taxation by ending a tax break that had been approved during the Schwarzenegger administration. Half of the revenues, an estimated $1 billion in the first year, go to the Clean Air Job Creation Fund established by the initiative. Policymakers were given some flexibility with the second half, and the administration was in agreement with the Legislature that the estimated $464 million, according to guidelines released by the governor, would go to the Department of Education, according to Greg Hayes a spokesman for Senator Kevin De León.
Beyond that agreement, however, the budget proposal became yet another battleground for Brown’s environmental image and fiscal challenges. Legislators argued that the governor’s proposal to give money to schools on a per student basis lacked the accountability necessary to ensure the funds efficiently achieved their goals of saving energy and creating jobs, according to Hayes.
Meanwhile, H.D. Palmer with the Department of Finance pointed out that the legislative proposal that required competitive bids could establish bureaucratic obstacles and slow the implementation of programs that would be both financially and environmentally beneficial to the state.
Sunday night, a compromise was reached that integrated both proposals for allocation, considering both poverty levels and size of the schools. Additionally, the agreement requires schools to apply for funds and report back on the projects’ effects on energy conservation and job creation.
That compromise was a victory for the governor who seeks to maintain his environmental credentials, while simultaneously balancing the budget of a state in weakened economic condition.
He made the case further his cautious budget proposals would not change California’s leadership on environmental issues. But while fiscal battles may soon take a backseat with the budget deadline this week, the pressure Brown faces from environmental interests is unlikely to relent anytime soon. It will continue long past this budget deadline and the next one into Brown’s re-election campaign next year.
In his response to the question about the cap-and-trade loan during Tuesday’s press conference, the governor said the Proposition 39 funding was a reasonable alternative to programs that would have been financed by AB 32 revenues.
“We’re the most aggressive in the western hemisphere, including New York, on clean energy goals,” he said during the press conference. “Anyone who says California’s not on the forefront, well they know what they’re talking about, but they just fib.”