MOORLACH UPDATE — Eclipse — August 20, 2017

On Monday, August 21st, California will experience two major events: the partial solar eclipse and the California Republican Assembly Caucus possibly making a transition to a new leader.

The OC Register provides the basis for the change on page one of its Commentary section. The current leader rationalizes that the Republican Party needs to change and become more “Arnold” like (see http://www.ocregister.com/2017/08/19/the-challenge-ahead-for-california-republicans/).

The challenger to his position provides a complete understanding of the vote that has created the cause for a coup and her vision for moving the Republican Party in California forward (see http://www.ocregister.com/2017/08/19/gop-leadership-requires-principles-and-winning-elections/).

After reading both pieces, I would say that the Assemblyman Mayes is wrong. The Republican Party does not need to change, it needs to lead. On “cap and trade,” the Republican Party should have provided a different alternative to taxing those generating carbon emissions. The leadership shown by Mayes was dismal and resembled capitulation more than providing creative solutions in the compromise. Where were the incentives for cleaner and more efficient emission statistics? Why always a stick and not a carrot?

The extended tax is the way to underwrite Gov. Brown’s overly expensive high speed rail infrastructure project, one that will never pencil out and pay for itself. It is government largess and waste at its finest. Addressing “cap and trade” in a Republican fashion would have been a win for everyone, the economy, the job makers, and those who need jobs. Gov. Brown’s approach is a disappointment. In fact, it’s crass. The manipulation of a critical environmental concern as a tactic to find more funding for a boondoggle is outrageous. And to be complicit in this scheme is poor legacy material.

I spent the last week out-of-state. I looked at how communities are situated, how much they’re paying for gas, and how locals are enjoying life. I came away with the sense that the overriding goal of the Democratic Party in California is to drive people out of this state. Addressing the high cost of housing is not a difficult matter, but the Democrats in California have made it one. Addressing the cost of living is not a difficult matter, but the Democrats believe that if they can convince you to migrate to another state, there will be more available housing for those remaining.

I would also say that “cap and trade” is not a policy that should be advocated by just one state, to its detriment. It is an initiative that should be pursued by our entire nation. I did not encounter dirty air on my vacation. As a nation, we get how important the task is of a clean and healthy environment. But, leading a very expensive parade on the backs of taxpaying businesses, only to look back in a few years and see how it has impacted our state’s competitiveness and seeing no one following, will not be the leadership that Californians will be proud of. For just an inkling of what’s ahead, I provided the submission below to the OC Register. Decisions have consequences. Bad decisions have repercussions. And my concerns about changing behaviors continues (see MOORLACH UPDATE — Changing Behaviors — August 4, 2017 august 4, 2017 john moorlach).

Assemblyman Mayes has had his chance to lead the Republican Assembly Caucus and all I can do is look at the results. When he assumed the role, there were 28 Republican Assemblymembers, now there are 25. That’s the only measurement I have to look at and now he’ll have 18. He is in no position to chastise anyone about the direction of where the Republican Party is going. It’s time for a leadership eclipse.

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CAP AND TRADE

Learning from “bunker” fuel tax

By John Moorlach

http://www.ocregister.com/2017/08/19/lesson-for-cap-and-trade-in-bunker-fuel-tax/

Now that we’re a couple of weeks from when Gov. Jerry Brown signed into law Assembly Bill 398, the cap-and-trade tax, it’s a good time to think about what will happen.

While discussing the bill on the state Senate floor, I recalled what happened in the early 1990s with the tax on marine bunker fuel, which is fuel held in ships’ “bunkers.”

I reminded my colleagues that we might even start seeing black-market gas. I remember Pete Wilson, when he was governor, raised the bunker-fuel tax in 1991. The tax went up for all the ship-liners that came into our ports. And what happened was that all these ships decided to fuel in Washington and Oregon and Mexico. They didn’t fuel in California, so the state’s tax revenues dropped like a rock.

In 1992, the Los Angeles Marine Exchange calculated nearly 100 ships a month bypassed Los Angeles and Long Beach rather than pay the 8.25 percent tax on bunker fuels. For July 1992, the volume of bunker fuel delivered to both ports dropped 68 percent from July 1991.

“This harbor has become a ghost town,” said Bob Forrester, regional director of the Inland Boatmen’s Union. “It’s terrible how many ships are passing us by.”

In September 1992, the Legislature passed a law suspending the tax increase. The Los Angeles Times reported up to 1,100 jobs could be saved. Wilson signed the bill.

Since then, the bunker-tax exemption periodically has been extended. And guess who in September 2012 signed the last extension until 2024? None other than Gov. Jerry Brown.

“We’re very pleased Gov. Brown understood this legislation is needed to keep the marine fuel industry alive and well in our state,” said John Berge, vice president of the Pacific Merchant Shipping Association, at the time. Berge noted that the bill had strong bipartisan support and the Legislative Analyst’s Office warned that not signing the extension would kill even more jobs.

Speaking of the LAO, although it cautions the exact costs of AB398 are “unknown,” under one “hypothetical scenario,” California gas prices “could” rise 73 cents a gallon over the next decade. Add that to the 19-cent gas-tax increase the Legislature passed in April, and gas taxes in California “could” rise 91 cents a gallon. For a typical two-car family using 20 gallons a week, that would be $1,000 a year.

The cost will be even higher for people who commute long distances because high housing prices push them far from work, or for landscapers, truckers, real estate agents and others who drive long distances for a living. I don’t have many farmers in my largely coastal and urban district, but I can’t imagine that farmworkers in the Central Valley are ready to bear these exorbitant prices.

Ironically, it’s easier to maneuver a giant ocean-going ship to a non-California port for refueling than it is to fill up your car in another state. And with the widening of the Panama Canal, shippers plan their routes to avoid our ports, sending more of our business to Texas to be delivered to us by rail.

High tax rates have consequences. And we can expect to see rising unemployment in industries that use a lot of gas. And cities near the borders with other states and Mexico will see gas stations close, as drivers fill up before entering California.

As these taxes add up, they will decimate family budgets the way the bunker-fuel tax did port budgets. Will the Legislature, and a new governor elected in November 2018, then hear the cries of Californians and sink the cap-and-trade tax next to the bunker fuel tax?

John Moorlach, R-Costa Mesa, is a state senator representing the 37th District.

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