New Report Says AB 32 Leading California Down a Costly Path; Billions in Lost Revenue for Local Government
Business leaders and local government officials gathered in Sacramento June 28 to discuss the California Manufacturers and Technology Association’s long anticipated AB 32 (California Global Warming Solutions Act) cost impact report and investment survey results. In the absence of a full, detailed jobs and cost impact report on the repercussions of AB 32, the CMTA has, with report author Andrew Chang, been working on a model to assess the jobs, fiscal, investment, and industrial impacts on the state. The report on the effects of AB 32 found the following:
- Cumulative costs: $135.8 billion
- Annual AB 32 direct costs in 2020: $35.3 billion
- Gross state product (GSP): reduced by $153.2 billion (a loss of 5.6%)
- California job loss: 262,000
- Household energy prices: increase by $2,500 per year for the average family
- State and local tax revenue: reduced by over $7.4 billion
- $6.8 billion from state revenue, $640 million from local revenue
Additionally, the investment survey found that manufacturing companies are no longer interested in calling California home. The report concluded that costs, regulations, permitting delays, a lack of incentives, high labor costs, and a high tax rate, among other things, make business difficult in the Golden State.
Of greatest concern to cities in California is the unknown impact of implementing SB 375. In a press conference, Diamond Bar Mayor Ling Ling Chang spoke of the impact AB 32 has on cities and families. Local governments stand to lose millions in revenue; at a time when municipalities are already facing increased costs, cities can’t lose what revenue they have coming in. While she agreed with the environmental aims of AB 32, she urges leaders to find more cost-effective ways to reach solutions.
See the full reports here.
For more information on AB 32, visit the California Air Resources Board.
Andrew Chang further explained the costs of AB 32 before the report’s release over at Fox & Hounds. See here.
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It should be pointed out that the $2,500 annual cost per family is based on the OPTIMISTIC projected scenario. From the SACRAMENTO BEE:
http://www.sacbee.com/2012/06/30/4600984/report-on-costs-of-californias.html#storylink=cpy
. . .
“These figures were based on an optimistic scenario, in which costs for each policy are assumed to be at the low end of a range of expected costs and the environmental goals are achieved, the study noted.
When less optimistic projections are used, families are saddled with $4,500 in annual costs and California would capture $38.8 billion less in local and state tax revenues by 2020, the report said.”
Richard, given these figures and your financial wizard background, will the value of my home in SD go up or down? I need to start planning my exit plan. 🙁
Ms. Right, I have no answer.
The irony is that a housing recovery will only accelerate the departures of productive people and retirees from California. They, like you, just want to get some real equity out of their homes before they depart.
There is pent up demand to leave the “Golden State.” Depressed housing markets caused that demand to build on a deferred basis. No telling the magnitude involved.
Of course, increased departures would lower demand for CA housing, which would kill off a big housing recovery.