Latest Hare-Brained Scheme: Use Cap-n-Trade Loot to Pay for High-Speed Rail
As California's high-speed rail project runs out of steam, you'd expect a savvy politician to shunt the thing onto a siding and earn points with the voters for making a tough-but-necessary decision.
Not Gov. Jerry Brown.
Taking a page out of President Obama's green-loan-guarantee playbook, Brown only fights harder to keep the California High-Speed Rail Authority doing whatever it is that the authority does. Most recently, Brown took to the airwaves to say that his own team's estimate of the project's projected cost is "way off."
In an interview with ABC 7 News in Los Angeles, Brown laid out a new plan for funding a project whose projected cost has more than doubled since voters approved a rail bond offering in 2008. "Phase 1, I'm trying to redesign it in a way that in and of itself will be justified by the state investment," Brown said. "We do have other sources of money: For example, cap-and-trade, which is this measure where you make people who produce greenhouse gasses pay certain fees—that will be a source of funding going forward for the high speed rail…It's going to be a lot cheaper than people are saying."
To recap: The high-speed rail authority recently lost its top brass and has been panned in reviews by the state auditor, the legislative analyst's office, the Institute of Transportation Studies at UC Berkeley and the state inspector general. The state is facing a September deadline to break ground or lose more than $2 billion in federal funds for the project.
Brown has responded by shutting down the inspector general's office and accusing rail skeptics of calling for the decline of California. When Brown refers to Phase 1, he means what is now optimistically named the Bakersfield-to-Fresno (formerly Corcoran-to-Borden) line, a route selected by Washington rather than Sacramento. When he refers to cap-and-trade Brown means a piece of legislation called AB 32, the signature achievement of Gov. Arnold Schwarzenegger, which made California the first and only state requiring generators of carbon to pay hefty taxes.
At his inestimable CalWhine blog, Chris Reed follows the money, only to find that the money is both reelin' in the years and out where the woodbine twineth:
I've been waiting for years to see what Sacramento did with the billions of dollars in cap-and-trade fees that will roll in if AB 32 is allowed to proceed even though its original rationale is now preposterous and demonstrably false. (No, it didn't inspire the rest of the world to copy California by forcing residents to accept a broad switch to cleaner but costlier energy.)
I remember a discussion with former Schwarzenegger adviser David Crane and other fans of AB 32 about the fact that higher energy costs are going to be much harder on poor people than the middle class or rich. I was told, no, the cap-and-trade fees would be used to insulate them from the economic pain caused by the regressive effects of higher energy costs.
And I snickered. Yeah, sure, that's who is going to benefit. Yeah, sure.
I always assumed cap-and-trade billions would be diverted to government employees' compensation instead of to poor people. Now, hilariously enough, the governor wants the billions to go for a boondoggle transportation project of the sort favored by wealthy suburbanites and rail cultists.
A point I have tried to emphasize in my own Calwhining about Jerry Brown's proposed budget [pdf] is that its revenue assumptions do not appear to have accounted for the depressive effects of cap-and-trade. But Reed points out an equally dangerous assumption: the budget refers to "potentially $1 billion" in annual revenues from this new exhalation tax. Is there any reason to believe this revenue estimate is accurate?