Jack Stewart speaks about the importance of a sales tax exemption
Dorthy Rothrock on regulatory impact analysis
Local Government Officials Warn of Increased Energy Cost Impacts from California Climate Change Policies
Sacramento County Will Face Over $10 Million in Increased Costs by 2020
Aug. 22, 2012
SACRAMENTO – Local governments throughout California will face increased annual energy costs of over $710 million in 2020 as a direct result of climate change policies under the state’s AB 32 law passed in 2006. This according to a new case study commissioned by the California Manufacturers & Technology Association and made public today by Sacramento local government officials.
Sacramento County is home to 1.4 million people. The implementation of numerous climate change programs will force Sacramento County to face severe financial impacts, including $6.2 million in increased electricity costs and an additional $4.3 million in transportation fuel costs, which is the equivalent to the total benefits and salaries of 47 deputy sheriffs in 2020.
The economic consequences from California’s climate change regulations thrust even deeper than county government. Local public entities such as cities, school districts, water agencies and public transit systems will face more than $3.3 billion in cumulative costs between now and 2020 and $711.2 million in 2020 alone.
“Soaring energy costs will result in our cities and counties having to bear the brunt of more financial hardship. We already have to make tough decisions on what services to cut and the implementation of these programs will only make things worse,” stated Rancho Cordova Councilmember, David Sander. “There must be a less expensive way to do this.”
The implementation of California’s current climate change policies will also cause significant financial uncertainty for small businesses – a key source of local tax revenues. This in part will result in local tax revenue losses of nearly $2 billion cumulatively and $646.8 million annually in 2020 statewide. Sacramento County will see tax revenue losses of more than $59 million in 2020 and $172.6 million cumulatively.
“California’s unemployment is the second highest in the nation, with Sacramento County at 11.1 percent unemployment,” said Sander. “Small businesses are the lifeblood of our economy, often supplying or creating larger companies within our communities. These measures make it almost impossible to compete in California, meaning fewer jobs and less local tax revenue. We simply can’t continue to place onerous regulations on those who can put California back on track to economic recovery.”
The study also shows that although electricity usage will decline each year due to greater efficiency, the costs on local governments will continue to rise and will increase by a total of $4.5 billion cumulatively by 2020.
School districts will feel the impacts from AB 32 as well. As the largest school district in California, the Los Angeles Unified School District (LAUSD) would be hit the hardest by these staggering costs. LAUSD will face costs of $27.3 million by 2020, beginning in 2013, as a result of higher electricity costs, which will reach up to $23 million, and additional transportation fuel costs, which will exceed $4 million.
“It is vital that California develops cost-effective climate change regulations that employers, consumers and our local government services can afford,” said Jack Stewart, president of the California Manufacturers & Technology Association. “In 2006, the Legislature promised that AB 32 would be cost effective. It’s time to take a serious look at these impacts and fix the regulations before it’s too late.”
The study conducted by Andrew Chang and Company titled, Fiscal Impacts of the California Global Warming Solutions Act of 2006 on California’s Local Governments, is an addition to the previously released study on the overall impacts on the economy. The studies can be found at www.cmta.net.