What is it that happened in January of 2007? AB 32 took effect and began shutting down entire segments of California’s economy. Let me give you one example from my district. The City of Truckee, California was about to sign a long-term power contract to get its electricity from a new, EPA-approved coal-fired electricity plant in Utah. AB 32 and companion legislation caused them to abandon that contract. The replacement power they acquired literally doubled their electricity costs.
Our study released today finds that small businesses in California will pay an additional $49,691 as a result of the California Air Resources Board’s implementation of AB 32. The study, which we conducted at the request of the California Small Business Roundtable, analyzes the potential economic impacts of AB 32 on the state of California, its consumers and its small businesses.
Our report reveals that when the plan is fully implemented, California families will be facing increased annual costs of $3,857 and that in order to cope with the increased costs generated by the Greenhouse Program, consumers will be forced to cut their discretionary spending by 26.2%. We conclude that when California’s climate change program, AB 32, is fully implemented, the average annual loss in gross state output from small businesses alone would be $182.6 billion, approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California. Lost labor income is estimated to be $76.8 billion, with nearly $5.8 billion lost in indirect taxes. This decline in revenues will have a severe impact on future state budgets.
The study’s cost analysis was based on the California Air Resources Board’s own findings, which revealed significant cost increases. The study’s findings are consistent with the Peer Review analysis commissioned by CARB, the Legislative Analyst’s Office (LAO) review of the Scoping Plan and an analysis conducted by the Los Angeles Economic Development Corporation (LAEDC). These independent analyses concluded that the cost of the AB 32 Scoping Plan would be significant, and that CARB had significantly underestimated these costs.






