I have written about the impact of AB-32 on Nevada County many times in the past. Now others are doing an assessment of the impact on California. An economic analysis of the new gas tax going into effect 1 Jan 2015 shows that low-income Californians will be hit hardest by higher gas prices and the resulting job losses. Details are in a press release by the The California Drivers Alliance which is a nonpartisan movement of motorists, small businesses, fuel providers and consumers concerned about new government-imposed regulations that could increase the cost of transportation fuels in California.
SACRAMENTO, Ca. – The “hidden gas tax” scheduled to hit California drivers on January 1, 2015 will result in a net reduction of nearly $3 billion in economic output and 18,000 jobs in the first year alone, according to an economic analysis released today by the California Drivers Alliance. According to the analysis, conducted by Dr. Justin L. Adams of Encina Advisors, there is also a nearly one-in-five chance that allowance prices in California’s cap-and-trade system could be 300 percent higher than expected, meaning economic losses could skyrocket to $10.8 billion and 66,000 jobs in 2015. “The consensus among economists is that the costs to purchase emission allowances for gasoline and diesel starting next year will have a significant impact on consumers at the pump,” said Dr. Adams. “As a result, placing fuels under the cap-and-trade system places an additional burden on California households, lowering their income and resulting in reduced economic activity and widespread job losses. The only question is how high will the allowance prices be next year and beyond.” Figures from the U.S. Bureau of Labor Statistics show that families making less than $40,000 per year spend up to 38 percent more of their income on gasoline compared to families making $70,000 or more annually. According to the analysis, low-income Californians would be hit doubly hard by the “hidden gas tax” because many of these individuals work in the service industries where job losses will be most severe. Job losses would be widespread across multiple service industries that are dependent on consumer spending, but losses would be greatest for food and beverage services, health service practitioners, and retail establishments and their suppliers.
Nevada County has 3,357 service industry related jobs, that are dependent on consumer spending, where the greatest number of jobs are going to be lost. The Median Nevada County income is $32,899. Over 30% of Nevada County households have an income below $40,000 a year. These households are going have less money to spend in local stores due to the hidden gas tax. But, the greatest impact may be on commuters. We have 31,850 commuters in Nevada County according to the Census, 76% of them commutes to work in a car alone, 10,824 those commute to work out of the county, with with 790 driving to the Bay Area (2.5 hr one way), 348 to Central Valley locations (3.75 hr one way), 5,245 to Placer County, 2,062 to Sacramento and 625 to Yuba County. About 1,096 commute to Nevada job locations. Every mile is going to be more expensive and these families are going to have less money to spend in local stores.
“Although aggregate job losses will moderate over time as the government spends cap-and-trade revenue, the government spending will not return lost service-sector jobs but instead favor industries like construction.
What is the government going to be spending AB-32 cap-and-trade funds on in Nevada County? Some grants maybe to our plethora of non-profit environmentalist organizations who produce nothing of value. Most of AB-32 slush funds will will go for Governor Brown’s Slow/High Speed Rail to Nowhere construction and in the general fund for buying political favors. Nevada Counties economic struggles are just going to become a much larger burden for all residence, not just small business in the new year. The full Press Release is HERE.