If Proposition 23 is Approved in November, California’s Global Warming Law Will be Suspended At Least Five Years

If voters approve Proposition 23 in November, which would “suspend” AB 32, California’s landmark greenhouse gas reduction law, recent economic forecasts suggest it will be at least five years before the law becomes operable again.

Three recent forecasts say that while California’s recession has bottomed, unemployment will remain at or above 12 percent for the remainder of 2010 and in double digits through at least 2011.

“As the recovery finally gets going, growth will be moderate at best in 2010,” said Jack Kyser of the Los Angeles County Economic Development Corporation in a July economic forecast

“Business firms will be reluctant to hire until they are certain that better times will be long-lasting,” Kyser writes. “Unemployment will remain stubbornly high, averaging 12.4 percent this year.”

Kyser predicts the unemployment rate will remain at 11.8 percent in 2011 – more than twice the 5.5 percent ceiling that would be established under Proposition 23.

In their July forecasts, Kyser and the Business Forecasting Center at the University of the Pacific in Stockton echo a June report by the University of California Los Angeles Anderson Forecast, which said unemployment would remain above 12 percent for the remainder of 2010.

“Unlike other deep recessions, the rapidity of the recovery, at least on the unemployment front, will be muted,” said UCLA Anderson Senior Economist Jerry Nickelsburg in a statement.

The University of the Pacific predicts statewide average unemployment at 10.9 percent for 2011 and 9.7 percent in 2012, still well above the Proposition 23’s cut-off.

In it’s California’s Fiscal Outlook: The 2010-11 Budget, the Legislative Analyst offers estimates of the state’s unemployment rate through 2015.

Their assessment predicts a statewide average unemployment rate of 11.3 percent in 2011, 10.2 percent in 2012, 8.9 percent in 2013, 7.7 percent in 2014 and 6.9 percent in 2015.

Opponents of the initiative say that the practical effect of Proposition 23’s passage is far more than simply “hitting the pause button,” as supporters of the initiative contend.

Proponents of the ballot measure, which they dub the “California Jobs Initiative,” say this:

“The California Jobs Initiative simply calls for a temporary adjustment in the timing of AB 32 regulations until the state’s oppressively high unemployment rate returns to a level similar to what it was at the time AB 32 was adopted by the Legislature.”

AB 32, which requires California to scale back greenhouse gas emissions to 1990 levels by 2020, was passed in 2006. The state unemployment rate was 4.9 percent that year, according to Employment Development Department statistics, and 5.4 percent in 2007.

Proposition 23’s opponents, also using Employment Development Department statistics, note that the rate of unemployment has been at or below 5.5 percent for four consecutive quarters only three times from January 1976 through September 2009.

In its appraisal of the proposition’s impact, the Legislative Analyst examines unemployment rates over the past 40 years:

“Since 1970, the state has had three periods – each about 10 quarters long – when the unemployment rate was at or below 5.5 percent.

“Economic forecasts for the next five years have the state’s unemployment rate remaining above 8 percent.

“Given these factors, it appears likely that AB 32 would remain suspended for many years.”

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