Prop 23 Update: Schwarzenegger’s global warming is over, but the economic horror continues!
07/05/2012 27 Comments
With news that Grass Valley will be moving the assembly and testing of their switchers out of Nevada County, and maybe even the state, one has to wonder if this is just local event, or part of a much larger exodus of manufacturing from the state due to excessive regulations and the pending cost of AB-32, the Global Warming Solutions of Act of 2006.
The California Manufacturers and Technology Association (CMTA) released a new report last week that suggests costs associated with AB 32 may be a lot higher than previously estimated. CARB issues an economic impact report in 2010, not not much analysis have been done since that CARB report was soundly criticized for being vague and incomplete.
The CMTA commission Andrew Chang & Company to conduct a fiscal and economic impact study on the economic impact of AB-32. They found that the average California family will end up paying an additional $2,500 annually by 2020 when AB 32 is fully implemented. Based on the most conservative estimates the state is expected to lose an additional 262,000 jobs, 5.6 percent of the gross state product, and a whopping $7.4 billion through decreased annual state and local tax revenues as a result,.
Here are the Key Findings of the Study:The Fiscal and Economic Impact of the California Global Warming Solutions Act (AB 32)
In our optimistic case, AB 32 will cost consumers $135.8 billion cumulatively by 2020. This is equivalent to almost two-and-a-half times the annual spend on K-12 education.
Annual AB 32 direct costs total $35.3 billion in 2020. This is equivalent to about 40 percent of California’s General Fund revenues, and exceeds the General Fund collections for Sales and Use Tax, Corporation Tax, Motor Vehicle Fees, Insurance Tax, Estate Taxes, Liquor Tax and Tobacco Tax combined.
26 percent of emissions reductions will stem from the economic slowing caused by AB 32.
AB 32 lowers California’s 2020 GSP by $153.2 billion, amounting to a loss of 5.6 percent of GSP.
California will have 262,000 fewer jobs in 2020 because of AB 32.
By 2020, increased energy prices will increase household expenses for the average family by $2,500 per year.
AB 32 will reduce state and local tax revenues by over $7.4 billion annually in 2020. $6.8 billion is lost from state revenues and $640 million from local revenues. The State losses are roughly equivalent to the amount that is needed to fund the Governor’s entire Local Realignment initiative or more than a decade of funding Children’sMedical Services program under the Department of Health Care Services.
“These policies will create a large but hidden tax on families and will add new burdens to a fragile state economy,” said Jack Stewart, President of the California Manufacturers and Technology Association (CMTA). “This new tax is not what we need while Californians struggle to find jobs, meet mortgage payments and maintain a reasonable quality of life.”
While many larger corporations will cope with the increased tax burden and just pass the cost on to the consumer, small Nevada County businesses lack that flexibility. The only solution maybe to just go out of business, or in the Grass Valley case just move operations to a more cost competitive location.
According to John Kabateck, California Executive Director of the National Federation of Independent Business:
“This comprehensive report tells us that small business will get hit from all sides. Consumers will have less money to buy our products, employers will be forced to purchase more affordable products outside of California, and our own energy costs will make it nearly impossible to stay in business.”
While policy makers need to seek more cost effective solution to reduce GHG, they may also need to review the need for such drastic economic action. Due to the economic slow down across the nation the US is approaching the 1990 GHG emission level and global warming has stalled out, with no warming since 1998. For 14 years there has been no warming, with a growing cooling trend in the last 10 years. The need for AB-32 has come and gone, the Schwarzenegger horror move is over! It is time for a reassessment of the need for AB-32.
You can down load the Full Study Report HERE.