State lawmakers return to confront cars, carbon and highways

August 21, 2015

SACRAMENTO — When state lawmakers return to the Capitol from their summer recess on Monday, awaiting them will be elements of a potential megadeal that could resolve three of the major issues they must tackle in the month that remains before adjourning for the year.

Those issues are:

  • Deciding the fate of far-reaching legislation that would double down on the state’s aggressive policies to combat climate change.
  • Fashioning a plan to finance a daunting backlog of highway maintenance.
  • Determining how to spend $2.2 billion in cap-and-trade revenues.

“It’s going to be an interesting four weeks,” said Rob Lapsley, president and CEO of the California Business Roundtable, an advocacy group that represents major corporations.

What ultimately happens, Lapsley said, will largely depend on when and how forcefully Gov. Jerry Brown fully engages on these issues.

“They’re looking for his input. I don’t think anything serious will happen until he engages,” Lapsley said. “His timing to date has been impeccable, and then he wins.”

Brown has been out front on climate change, having made it his signature issue and emerging as a leading international advocate. He now is making plans to attend the U.N. Climate Change Conference in Paris this fall.

One of two key climate-change measures pending in the Assembly, Senate Bill 350, would put into law three goals Brown laid out at the beginning of the year: reducing fossil fuel use in transportation by half; requiring electricity providers to purchase half their power from renewable sources; and doubling the energy efficiency of existing buildings, all by 2030.

The other, SB 32, would extend California’s groundbreaking climate-change law to 2050, requiring that greenhouse-gas emissions be reduced to 80 percent below 1990 levels by that time. It would put into law the terms of an executive order issued by Brown earlier this year.

There is no question Brown will push hard for passage of those two bills, which face resistance from the oil industry, several business groups, Republican lawmakers and some moderate Democrats. What remains to be seen is whether final details of the bills can be negotiated as part of a larger deal to address the estimated $59 billion backlog in highway maintenance and improvement projects.

Opinions differ on whether the climate-change bills on their own, already passed by the Senate, can make it through the more conservative Assembly.

“They need some major changes if they are to move forward,” Lapsley said. “It’s an open question whether they are going to pass.”

Bill Magavern, policy director for the Coalition for Clean Air, disagrees.

“We’re actually in pretty good shape,” he said. “The governor and the pro tem are a very powerful alliance, with the support of the speaker.”

Senate President Pro Tem Kevin de León, D-Los Angeles, is the author of SB 350, and Assembly Speaker Toni Atkins, D-San Diego, backs both climate-change bills.

When maneuvering over the climate-change bills begins Monday, discussions will resume on a parallel track in a special session called by Brown to deal with highway funding.

A coalition of labor, local government and business groups has proposed a package of steps that includes reforms designed to streamline road construction, use of some cap-and-trade revenues for highway improvements, and increases in the gas tax and vehicle registration fees to provide an ongoing stream of financing for road maintenance.

Because that package includes some tax increases, its passage would require a two-thirds vote of the Legislature, which means at least a few Republican lawmakers would have to support it.

The proposal includes some elements advocated by Republicans, such as streamlining environmental regulations for road projects and using cap-and-trade revenue, and some advocated by some Democrats, including new revenue sources.

“We have compiled what ought to be the makings of a deal under any rational circumstance,” said Jim Earp, executive consultant to the business-labor group called the California Alliance for Jobs. “Whether it translates into a deal remains to be seen.”

The prospect of an agreement that would include some tax increase has alarmed anti-tax conservatives, including blogger and former state party Vice Chairman Jon Fleischman. He penned a red-flag alert to conservatives last week, saying that a bipartisan vote for any tax increase would pave an “ugly” path for GOP lawmakers heading into 2016.

Assemblyman Scott Wilk, R-Santa Clarita, chairman of the Assembly GOP caucus, said his Republican colleagues should stick with their proposal to increase highway funding by using existing revenues.

“The majority party chose not to fund things the voters want to raise taxes,” he said.

Still, Wilk describes himself as “open to a deal on transportation.”

One issue of concern to GOP lawmakers and many of the same business groups supporting the transportation package is the role of the California Air Resources Board in carrying out the proposed climate-change legislation.

Lapsley says the climate-change bills as written would give the board “complete, unregulated authority.”

Supporters call that argument a red herring, put forth by opponents who recognize that polls show there is broad public support for the substance of the bills.

“It’s a phantom issue conjured up by oil companies,” said Magavern of the Coalition for Clean Air. “Every member of the ARB serves at the pleasure of the governor. He could sack any one or all of them at any time. The governor is elected by the people, and he appoints people to carry out the mission of the governor and the Legislature.

Sen. Fran Pavley, D-Agoura Hills, was the co-author of the landmark 2006 law to cut greenhouse-gas emissions and is now authoring the bill to extend that law. She believes the role of the air board in establishing regulations is appropriate, but is also a strong advocate for greater legislative oversight of the program.

She notes that implementation of the climate-change bills would involve multiple state agencies, including the California Energy Commission, Public Utilities Commission and Governor’s Office of Planning and Research.

“If we’re not providing oversight, we should be,” she said. “All of these programs can be amended and changed over time.”

Although environmental groups oppose the idea of funding road improvements with any revenue from the cap-and-trade auctions the air board conducts, Pavley believes it might be possible to make a case for that.

“It’s borderline. You could make the argument that improving roads would reduce emissions, but I don’t know how you quantify it. If a case can be made, I think it’s worth talking about.”

Lawmakers and Brown put off decisions on how to spend cap-and-trade revenue in enacting this year’s budget. Under an agreement reached last year, 60 percent of the revenues are committed to funding high-speed rail, various transit programs and housing projects that promote transit use. That leaves more than $1 billion, from which a portion could potentially be designated for road projects that alleviate traffic congestion.

Pavley agrees that the elements for a grand deal exist: adopt the climate-change proposals, but add legislative accountability provisions opponents say they want; consider setting aside some of the revenue the climate-change law generates through cap-and-trade auctions for roads; make those revenues part of a larger transportation package.

Assemblywoman Jacqui Irwin, D-Thousand Oaks, said the final month of the legislative session could be eventful as “everything comes down to the wire.”

She said she believes there is strong public concern “about the negative effects of climate change” and a consensus that “something has to be done to start addressing streets and roads.”

Will an agreement emerge?

“I think the momentum is there for a deal on infrastructure,” Irwin said.

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