California Gov. Jerry Brown on Tuesday reiterated the state's support for aggressive climate change, including a multi-billion-dollar cap-and-trade program, while preaching the need for prudence and "rainy day" funds in the face of uncertainties about the budget and incoming Trump administration.
Even without the uncertainty surrounding how President-elect Trump’s administration may impact environmental and energy policies, California's tax system, the most progressive in the nation, makes it difficult to predict from year-to-year revenue streams, Brown said.
"If you want a progressive tax system, you have to have a very big reserve and rainy day fund," said Brown, adding that the uncertainties surrounding the federal government this year add to the size of reserves needed for fiscal year 2017.
In responding to questions about his $179.5 billion budget proposal and estimated potential $1.6 billion deficit, Brown said the state's precedent-setting cap-and-trade program is "an important part" of California's climate change initiative that seeks to reduce carbon emissions to 1990 levels by 2020 and then take them to much lower levels over the next 25 years after that.
California is "a leading force in the world" working to counter climate change, and Brown promised to work for state legislative approval to continue cap-and-trade programs beyond 2020, its current legislative limit.
"Given the fact that the federal government appears to be headed in the opposite direction, California may want to strengthen its own commitment," he said. California now has been joined by more than 160 states, regions and nations that have formed a global coalition aimed at fighting climate change. Brown said the science is "clear and getting stronger."
Regarding the recent election, which resulted in a GOP-dominated Congress and White House, Brown said, "I am very optimistic that what is going on in Washington, DC, is just a 'pause’ and not a new direction. But if things get drastic, I don't rule out any initiative” supporting climate change and the environment by the state.
Brown is predicting "worse financial news" with an inevitable recession from the federal changes now expected with the Trump administration. "This uncertainty about the future makes acting responsibly now even more important.”
While Brown is not facing the $27 billion budget shortfall he faced when he returned to the governorship in 2011, the state has a $1.6 billion deficit this fiscal year. The governor said "small deficits can quickly mushroom into large ones if not promptly eliminated."
Members of Brown's cabinet held a separate briefing detailing plans for continuing to address the issue, with $2.2 billion assigned by the governor for the California Environmental Protection Agency (CalEPA).
"The cap-and-trade program is a critical tool for achieving our climate goals," said CalEPA chief Matthew Rodriquez. "The program provides flexibility for the private sector so achieving GHG [greenhouse gas] emission reductions can be done cost-effectively, along with providing incentives for investments in new technologies."
Rodriquez acknowledged that last year the state cap/trade auctions experienced volatility. Last fall, state leaders agreed on a distribution plan for proceeds from California's $3.2 billion cap-and-trade program for the new fiscal year. The deal allocated $900 million in investments and reserved another $462 million for the current fiscal year 2016-2017, much of the money going to various clean transportation programs.
As the centerpiece of the state's milestone 2006 climate change law (AB 32), pieces of which the California Air Resources Board has been implementing for more than a decade, the cap-and-trade program was created to have electric generation plants, major industrial operators and refineries limit GHG emissions while allowing the trading of emissions credits over multiple years.