Can struggling state really afford a new costly energy scheme?
This week, Mechanics Bank investment fund manager Brian Pretti asked the more than 200 people at the monthly Sonoma County Alliance meeting for a show of hands if they thought the economy was better today than this time last year.
Most half-heartedly raised their hands part way. Asking again if things were a lot better than a year ago elicited zero hands.
And so goes the recent jobs report from the feds. The economy, they said, created 162,000 jobs in March. Great. Only about 8 million more to go just to get back to 2007. As Mr. Pretti told the Alliance group, 48,000 were census temps and 100,000 of it was a labor department complete guesstimate.
Meanwhile the number of people unemployed more than six months — with the young hit particularly hard — was at a record. And local and state payrolls are almost certain to continue shrinking in the months ahead at the same time stimulus funding is receding.
In the North Bay, Sonoma County alone has lost thousands upon thousands of jobs. Though the months are not exactly comparable, the figures are stunning. In October 2007, the total number of jobs in all industries in Sonoma County was 200,200. In February, the number stood at 171,400, a decline of 28,800.
Too pessimistic, maybe. But any way one looks at it, unemployment looks as though it is going to remain unacceptably high for the foreseeable future.
Which is one reason why a new effort is under way to delay implementation of what many see as the job-killing California cap and trade scheme that was part of AB 32 passed when the economy was at its peak in 2006.
The energy industry and anti-tax and business groups are getting behind qualifying a November ballot measure that would bar the state from implementing the law until the unemployment rate is at or below 5.5 percent for a year. California’s unemployment rate today is 12.5 percent.
Back in the heady economy of 2006, the higher energy costs associated with AB 32’s cap and trade provision – which would limit overall greenhouse gas emissions and then create a market to trade units – seemed somewhat affordable.
As if to prove that concept, the California Air Resources Board estimated in 2008 that the energy innovation spurred by the scheme would create 100,000 jobs.
Just two years later, a second CARB estimate released last month projects just 10,000 jobs.
Meanwhile, the Wall Street Journal reported last week that a study conducted for a small business group forecast the law could raise the average California household’s transportation, energy and food costs by $3,900 a year, or 15 percent.
The California Legislative Analysts Office acknowledged the law “will result in the near term in California job losses” but that the impact would be small to the overall economy. The office said, according to the Journal, some businesses and households “would be seriously affected,” but it rejected the most dire predictions of the small business study.
But at the end of the day, voters and policy makers need to ask, “Can we afford this right now?”
Few would argue against continued aggressive investment in and pursuit of new environmental technologies that will give California a better future.
But imposing an expensive new regulatory regime on a state that is already struggling to pay its bills raises legitimate questions about whether it would do more to hinder rather than help California reach that goal.
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Brad Bollinger is Business Journal editor in chief and associate publisher. He can be reached at 707-521-4251 or bbollinger@busjrnl.com.
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