The non-partisan state Legislative Analyst’s Office conducted a qualitative analysis of the costs of the AB 32, the state’s landmark climate bill, and the California Air Resources Board scoping plan, at the request of Assembly Member Dan Logue (R-Marysville). Specifically, the LAO found:


  • California’s economy at large will likely be adversely affected in the near term by implementing climate-related policies that are not adopted elsewhere. This is in large part because such policies will tend to raise the state’s relative prices for energy, such as electricity
  • These adverse effects will occur in large part through “economic leakage,” as certain economic activity locates or relocates outside of California where regulated-related costs are lower.
  • While it is true that there will be both winners and losers under the SP, including gains in so-called “green” jobs, the net economy-wide impact in the near term of implementing the SP in the absence of like policies in place elsewhere will in all likelihood be negative.
The conclusion of the study takes back much of the negative impacts by pointing out that since California has already lost most of its manufacturing base, the economic impact on the state's economy is likely to be “modest.”

The bottom line, according to the LAO, is that “certain specific companies” will be adversely impacted by the SP measures, and they include producers or refiners of aluminum, chemicals, forest products, glass, metal casings, minerals, petroleum or steel.

“With California struggling with over 2.3 million unemployed, a multi-billion dollar budget deficit and ongoing economic crisis, the LAO’s comments call into renewed question the wisdom of moving ahead with billions of dollars in increased energy costs and job losses that will put our state at an even greater competitive disadvantage,” says Logue. “The only fiscally responsible option here is to send CARB back to the drawing board to conduct a more objective, comprehensive evaluation before condemning California to further economic hardship with no impact on global warming.”

Also commenting on the LAO analysis, William E. Davis, executive vice president of the Southern California Contractors Association, says, “What a sad commentary on our state’s future...the high cost of regulation, land and labor in California has already destroyed most of our manufacturing capacity, leaving the state’s economy dependent on the ‘service’ sector, so the damage that AB 32 will do to the economy is ‘modest.’ Do you want fries with that?” 

A copy of the Legislative Analyst's Office's May 13 analysis is available at:

Mentioned at the recent AGC of California meetings and conference in Monterey was the industry effect from Stockton’s hiring requirements for construction of public works projects. The city ordinance requires that at least 50% of the contractor’s total construction work force, including any subcontractor work force, measured in labor work hours, to be composed of Stockton residents. Also, the city requires that contractors on all public works contracts over $100,000 make good faith efforts to employ apprentices enrolled in a viable San Joaquin Valley program.

The AGC contractors indicated that since the economy is so bad for workers these days (Stockton has an unemployment rate of 19.2%), other cities may be looking at these kinds of hiring requirements. Some cities already have done something similar.

Also at the AGC conference, keynoter Gary Dietrich, a speaker, political analyst and former campaign manager, noted that the current trend of voter unrest and the shifting of “fiscal tectonic plates” via increased bond initiatives has paved the way for the emergence of a “new political reality” in this country. Other words: Incumbents beware.

What’s really affecting elections now, Dietrich says, is the growth of the “decline to state” party of independents, now at 20% of the electorate and growing faster than any other party.