Cap and Trade Revenues

By Tom Campbell

The August 2017 auction of cap-and-trade certificates brought $935 million to California government revenues. The Legislature was not long in spending it. $640 million was allocated to Governor Jerry Brown’s high-speed rail project.

In future years, 25% of the revenues generated by California’s cap-and-trade program are earmarked for the high-speed rail line. This project, championed by Governor Brown, is now more than 10 years behind budget, and more than three times its originally estimated cost.

Cap-and-trade requires businesses with large green-house gas production to pay for a certificate to emit. This has added to the cost of doing business in California.

Instead of using the cap-and-trade revenues for the high-speed rail, the state should direct the funds earmarked for the train to retire the outstanding bonds that were sold to construct the train. When those bonds have been retired, the cap-and-trade revenue should be directed to increase the California earned-income-tax-credit. That will augment the earnings of the poorest workers in California, while expanding the number of jobs available here. This will offset, in part, the effect of the cap-and-trade program that increased the cost of doing business in California. Virtually every other interest group has laid claim to the money for other pet-projects.

The above are statements on several public policy issues drafted by Tom Campbell, former US Congressman, former California State Senator, former Director of Finance for California, and currently Interim Chairman of the Common Sense Party. They are meant to initiate consideration of several important issues; they are not the official views of the Common Sense Party. Please feel free to submit your own thoughts on these issues on the Open Policy Discussion Page.