Your Money: Sacramento's Favorite Fuel

Posted: Jun 20, 2007 12:01 AM

If you want to know why the state budget is such a mess, consider the Assembly's 48-to-29 vote in favor of AB118. The measure, authored by Speaker Fabian Nunez, would raise fees paid by California drivers by $167 million in order to fund research for alternative and renewable fuels.

According to the nonpartisan Legislative Analyst's Office, state expenditures are expected to exceed revenue by more than $3 billion for this budget year (2007-08), and the deficit is expected to grow to more than $5 billion in 2008-2009. So what does Sacramento do? Raise fees to pay for new programs, even though it doesn't raise enough money to fund today's programs.

In the rush for Sacramento lawmakers to catch the wave of the latest trendy new thing, they're happy to expand the size of government, even if they can't buy old government all its shoes.

Asked why the Legislature would be raising taxes (excuse me, "fees") to pay for new programs when it has failed to close the structural spending shortfall, Jon Coupal, president of the Howard Jarvis Taxpayers Association, evoked an old Ronald Reagan quote: The California Legislature, Coupal opined, is like a baby's "alimentary canal," with "an insatiable appetite at one end and no responsibility at the other."

But Bob Stern, president of the Center for Governmental Studies in Los Angeles, argued that the fee increases to fund fad fuel research -- OK, those are my words -- show the Legislature is growing: "At least they're not taking it out of the current budget. At least they're saying we have to pay as we go. Usually, they pass legislation and take it out of the general fund."

Indeed, as I learned, an early version of AB118 created two new programs -- the Air Quality Improvement Program and an alternative and renewable fuel program -- without paying for them. So in a sense, the bill's proposed increases in the vehicle license fee, vessel registration fee, license plate fee and drivers' license fee represent progress.

Except that Sacramento Dems strongly oppose Gov. Arnold Schwarzenegger's proposal to suspend a $185 million cost-of-living increase to recipients of aid for the aged, blind and disabled -- in order to balance the budget. If they want to raise fees, why not put the money to help the poor and the sick?

There's a two-part answer. First, any new fee revenue has to go to projects linked to the fee -- as in driving and alternative fuels. Lawmakers would have to raise taxes in order to put the money into the general fund -- and unlike fee hikes, tax hikes require a two-thirds vote. Republican opposition makes a two-thirds vote to hike taxes highly unlikely.

Two, Nunez and company believe Schwarzenegger could balance the budget without withholding the cost-of-living increase if he did not propose accelerating the payment of the economic-recovery bonds to the tune of $600 million. Nunez spokesman Richard Stapler said the matter would be settled if "instead of paying off Wall Street" Schwarzenegger focused on "Main Street."

Oddly, though, AB118 is all about Wall Street. It would put the state into the venture capital business. Think dot-com bubble. As GOP Assemblyman Michael DuVall observed, "I don't think that's a good investment."

Stapler argued that AB118 "is a pretty good investment, not only to reduce our dependence on foreign oil, but also to clear the air in California."

Problem is, real-life venture capitalists are likely to jump into the best fad fuel investments quickly. State taxpayers could be left with the fumes.

"Either venture money will follow us, or vice versa," Stapler responded. I still wonder why state taxpayers should have to bankroll research when the private sector can do it.

Besides, politicians have been promising to reduce American dependence on foreign oil for decades -- with little to show for it.

You have to wonder if Sacramento's favorite use of energy is burning other people's money.

Sacramento has long faced a choice between doing a few things well and many things poorly. Time and again, lawmakers choose to do many things poorly. Why shouldn't they? They keep getting re-elected.