Saturday, December 19, 2009

Will AB 32/SB 375 Even Happen?

It is becoming more and more obvious that AB 32 (the foundation upon which SB 375 is built) might not make it to its 2012 launch date. The forces that are gathering now to undo what Arnold hath wrought grow louder every day. And if that happens we could very well dodge the bizarre RHNA numbers and unfunded Sacramento mandates that organizations like SCAG (and SCAG/CEHD functionaries such as Joe Mosca) are working so very hard to make happen here. Something that could result in unwanted high-density development in Sierra Madre and throughout the San Gabriel Valley "transportation corridor." Below is an excellent article from Fox & Hounds that details the costs associated with AB 32. The authors' conclusion is that in an economic climate such as ours AB 32 could be an economic disaster. A contention that Arnold Schwarzenegger, now saddled with Gray Davis level approval ratings, might no longer have the political capital to fight.

New Study Finds AB 32 Scoping Plan Imposes Staggering Costs on California’s Families and Small Businesses

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Sanjay Varshney is the Dean of the College of Business Administration at the California State University, Sacramento. Dennis H. Tootelian Ph.D is a Professor of Marketing and the Director of the Center for Small Business at the California State University, Sacramento.

Our study released today finds that small businesses in California will pay an additional $49,691 as a result of the California Air Resources Board’s implementation of AB 32. The study, which we conducted at the request of the California Small Business Roundtable, analyzes the potential economic impacts of AB 32 on the state of California, its consumers and its small businesses.

The study focuses on the costs to be incurred by consumers in five specific areas: housing, transportation, natural gas, electricity and food. Using three different scenarios to measure the economic costs, we find that the potential loss of output, jobs, indirect business taxes and labor income is substantial and significant.

Our report reveals that when the plan is fully implemented, California families will be facing increased annual costs of $3,857 and that in order to cope with the increased costs generated by the Greenhouse Program, consumers will be forced to cut their discretionary spending by 26.2%. We conclude that when California’s climate change program, AB 32, is fully implemented, the average annual loss in gross state output from small businesses alone would be $182.6 billion, approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California. Lost labor income is estimated to be $76.8 billion, with nearly $5.8 billion lost in indirect taxes. This decline in revenues will have a severe impact on future state budgets.

Small businesses drive the economic engine in California. They comprise 99.2% of all employer firms and 99.7% of all firms. They account for over half the employment, over 90% of net new job creation, and 75% of the creation of gross state output. Costs borne by small businesses due to the implementation of AB 32 must be carefully evaluated for a full understanding of their significance and impact on the state and residents.

The study’s cost analysis was based on the California Air Resources Board’s own findings, which revealed significant cost increases. The study’s findings are consistent with the Peer Review analysis commissioned by CARB, the Legislative Analyst’s Office (LAO) review of the Scoping Plan and an analysis conducted by the Los Angeles Economic Development Corporation (LAEDC). These independent analyses concluded that the cost of the AB 32 Scoping Plan would be significant, and that CARB had significantly underestimated these costs.

An adverse impact on small business is bound to adversely impact the production of goods and services in California, the risk tolerance of entrepreneurs and investors, the productivity of labor, the quality of life, and the overall well being of the State and its citizens.

Currently California is facing one of the highest unemployment rates in the nation, an unstable real estate market with rising foreclosures, and rising numbers of families looking to move out of the state to find a more affordable living. Businesses are similarly faced with an inhospitable environment that features some of the highest taxes and utility costs in the nation, and an unfriendly regulatory climate that will likely result in more leakages of businesses elsewhere.

Legislative and regulatory mandates may result in practices and policies that raise the costs of operating for small business or provide a deterrent to small business growth, and hence provide disincentives for economic risk taking and entrepreneurship. This appears to be the case here. While the ultimate goals of AB 32 are not in question, the findings of this study suggest that the costs associated with the implementation of the AB 32 Scoping Plan will have significant adverse impacts on California’s economy, consumers, and small businesses.


  1. Sir Eric!

    How can we help to rid us of this AB32 bill?

  2. One of the big issues of the 2010 Governor race has now crystallized,
    and it isn't going to be much help for the incumbents that voted for
    AB 32. Arnold's great legacy is going to turn out to have the life span
    of a gnat. Cities like Sierra Madre has a lot at stake in this matter. Do
    not forget that.

  3. Please list all representatives who voted FOR/YES on AB32.

    I want to support their opponents.

  4. You can start with Anthony Adams and Bob Huff.

  5. Sign the petition on the link to suspend AB 32

  6. Here is the link to the voting record for AB 32. It passed 23 to 14. Most of those members who passed it are no linger in office.

  7. 8:45 - do you have a link to those who voted for SB375? Maybe that would be more to the point.

  8. It's too bad that SB 375 was used in a twisted fashion to force an implementation methodology of AB 32 that is completely misapplied.

    AB 32 was meant to collect GHG information, not tell jurisdictions what to do about it. Then SCAG got into the act to turn the whole thing into a monstrous development mandate. Realistically, AB 32 should be used to cut down on development and to reduce traffic, not the other way around. It was supposed to force innovation and new approaches to energy and consumption without dictating specifics, which is why it got hijacked. So much for small businesses and better ways to do things.

    Maybe Copenhagen principles of agreement can be used to modify what's going on in Sacramento, which amounts to a last act of desperation due to our imploded economy and the State's resultant loss of revenue.

  9. SCAG got involved because the BIA and other development interests wanted to kidnap what were good intentioned efforts to curb greenhouse gases for their own interests. And since money speaks the loudest in Sacramento, their will became law. Something that could cause great harm to small cities such as ours if it isn't stopped. The notion that you can stop global warming by building large amounts of condos is only something those sell outs in Sacramento could possibly believe.

  10. OK 9:00 here is the list again.
    MEASURE: SB 375
    AUTHOR: Steinberg
    TOPIC: Transportation planning: travel demand models
    DATE: 08/30/2008
    MOTION: Unfinished Supp 3 SB375 Steinberg
    (AYES 25. NOES 14.) (PASS)


    Alquist Calderon Cedillo Corbett
    Correa Ducheny Florez Kehoe
    Kuehl Lowenthal Machado Migden
    Negrete McLeod Oropeza Padilla Perata
    Ridley-Thomas Romero Scott Simitian
    Steinberg Torlakson Vincent Wiggins


    Aanestad Ackerman Ashburn Battin
    Cogdill Cox Denham Dutton
    Harman Hollingsworth Maldonado Margett
    McClintock Wyland



  11. All Tattlers please bookmark this link. It is the site for all California Bill Information current and past. You can look up any bill and find the status and who is supporting or opposing it.

  12. Great links Pasta. Thanks.

  13. Mountain Views News is late again this week. You really have to feel sorry for all the poor retailers fighting for Christmas business who advertise there. That paper is a faithless friend.

  14. I wish they would run that old bat out of town.
    She's a crook.

  15. In addition to a boatload of gall, she also has quite a bedonkadonk.

  16. I submitted a post but see it was never placed on the site and that just really proves a belief that I have developed based on experience: rather than allow different views to be voiced and heard, the right chooses to just "speak" over everyone else and suppress others. that doesn't sound very democratic or free to me, but I guess we all have our own perspectives.

    It doesn't take a college graduate to notice that you have only posted comments on this site that agree with you. you might ask yourselves what is wrong with that picture?