SAN FRANCISCO Feb 9 Revenue raised by
California's greenhouse-gas emissions trading program could be
distributed to state residents to offset higher fuel costs or
used to reduce the state's projected deficits, a state budget
watchdog agency said on Thursday.
"Our analysis indicates that such revenues could be returned
directly to Californians - such as in the form of a check - as a
dividend that would be intended to offset their increased
expenditures on goods and services that ultimately would become
more expensive as a result of the cap-and-trade program," the
Legislative Analyst's Office said in a report.
The report added that revenue from the program, which goes
into effect next year, could also be used as part of a
"multiyear approach to reduce the state's projected General Fund
"The availability of these revenues could allow the state to
avoid other actions, such as cutting governmental programs or
increasing state revenues, that could slow the state's economy,"
the report said.
The report comes as California prepares to implement its
Global Warming Solutions Act enacted in 2006. Commonly referred
to as AB 32, the law established the goal of reducing greenhouse
gas emissions in the most populous U.S. state to 1990 levels by
To meet that target, California will establish a so-called
cap-and-trade program that issues allowances to companies that
emit carbon dioxide and other greenhouse gases at facilities
such as power plants, refineries and factories and that permits
the allowances to be traded.
Revenue from the program is expected to vary annually, from
less than $1 billion to nearly $14 billion, according to the
Legislative Analyst's Office.
Governor Jerry Brown's state budget plan expects the program
to generate $1 billion in revenue in the next fiscal year,
including $500 million that will be used to fill the state's
general fund, which faces a $9.2 billion deficit.
Brown also wants to put cap-and-trade revenue toward other
clean-energy, natural resources and other uses, including toward
funding a planned statewide high-speed rail network. The
Democratic governor put the idea of funding the rail project
that way out recently during a television interview, catching
lawmakers by surprise.
Legislators from both parties in the Democrat-led
legislature have become increasingly concerned about the planned
rail network, which is also under attack from Republicans the
U.S. Congress and California's Central Valley, where the U.S.
government is insisting the network's first line must be built
to receive more than $3 billion federal funds.
At issue for California lawmakers are escalating cost
projections for the rail project. Its latest estimated cost
nears $100 billion, which eclipses its previous estimate of $43
billion as well as the $10 billion in general obligation debt
voters approved in 2008 to help build the rail system.
Lawmakers are also concerned that voters are souring on the
ambitious rail plan, which is intended to connect California's
far-flung metropolitan areas. Nearly two-thirds of voters want
lawmakers to put the bond package back on the ballot, and if
given another vote on it, 59 percent would reject it, according
to findings of Field Poll released in December.
Brown is enthusiastically behind the rail project. He met
with U.S. Transportation Secretary Ray LaHood on Thursday and
both men affirmed support for it.
After a tour on Wednesday of a Siemens plant in Sacramento,
California where the company light-rail car, LaHood said the
Obama administration stands behind putting the rail system's
first line in the Central Valley to link the cities of Fresno
That idea is not going over well in California's
legislature, drawing criticism from lawmakers from both parties.
While the farming region's flat terrain may be suitable for
running high-speed trains, many lawmakers would prefer to start
lines in urban areas -- and many would prefer the state not
start the project at all given its costs.
Brown's finance department is preparing a report on rail
project that will help guide lawmakers in coming months to
decide whether California should issue the first set of bonds to
finance construction of the project's first leg.
(Reporting By Jim Christie; Editing by Bernard Orr)