HUGE PRICE TAG SEEN FOR CALIFORNIA INITIATIVE

A preliminary study of the economic effects of California's Big Green initiative shows that it would impose staggering costs on industry, consumers, and government.

Especially hard hit would be the petroleum industry, according to the study by Spectrum Economics Inc., San Francisco, for the California Coordinating Council, a coalition formed by businesses and associations to defeat the initiative. The council hired San Francisco political consultants Woodward & McDowell to lead the campaign to defeat the measure.

In addition, California voters reject the initiative when they learn of its contents, according to a poll conducted for the council.

BACKGROUND

The initiative, the California Environmental Protection Act of 1990, is backed by California Atty. Gen. John Van de Kamp and the initiative chairman and California assemblyman who introduced the bill, Tom Hayden. Van de Kamp ran second in the Democratic primary race last week for governor against former San Francisco Mayor Dianne Feinstein.

The initiative has qualified for the Nov. 6 ballot. Among other things, it would slash carbon dioxide emissions by 40% in 20 years, make state waters permanently off limits to oil and gas drilling, and raise a $500 million oil spill contingency fund with a 250/bbl tax on oil moved through California waters.

Other elements of the initiative would target pesticide use, the timber industry, and chlorofluorocarbons (OGJ, Feb. 5, p. 30). Further it would create the office of an environment "czar" with sweeping investigative, regulatory, and legal enforcement powers on environmental compliance.

Spectrum said the cost of the Hayden initiative, if made law, would be staggering.

"Implementation of it would dramatically alter the California lifestyle, reduce future employment growth, reduce state and local tax revenues, and cost industry, consumers, and state and local governments billions of dollars," Spectrum said.

AUTO USE COSTS SOAR

According to the study, the initiative's CO2 emission reduction and CFC phaseout would raise the cost of and potentially constrain Californians' automobile use in these ways:

Hike gasoline prices by at least 25-500/gal by 2000, with price increases more than double that amount by 2010.
Restrict consumer choice of automobiles to vehicles with fuel efficiencies of 40 mpg or better.
At least double the price of diesel fuel for commercial transportation and possibly result in rationing the fuel.
Tighten supplies of refrigerants to service existing auto air conditioners, rendering $90 million or more of installed auto air conditioners useless.
Force restrictions on auto use if higher gasoline prices and increased auto efficiency don't achieve the big CO2 emission cut expected.

OTHER EFFECTS

The CO2 element also would hike state electricity prices by more than 20%, the study found. Further, water pollution abatement costs would soar under the measure, mandating costly pollution prevention audits by industry. Industry spending on water quality controls would at least double to $800 million/year by 2000 from current levels.

The measure also would extend state worker safety regulations (Cal-OSHA) to all chemicals on the Proposition 65 list, expanding current regulation of about 13 chemicals to 200 or more substances used in perhaps 1 0,000 applications.

Spectrum also contends the initiative's stringent water quality standards would sharply squeeze water supplies, even below current drought conditions, limiting industrial and agricultural water use.

Construction in the state could be stymied because simultaneously expanding sewage treatment capacity - already at the limit in many areas-and tightening water quality controls would be unaffordable.

ECONOMIC DISLOCATION

The resulting economic dislocation would slash state and local tax revenues by $812 billion/year by 2000 and hike state and local administrative costs by more than $600 million/year in the 1990s, the study concluded.

Further, the measure's high costs would fall disproportionately on low income families, blue collar workers, the fixed income elderly, and small businesses, Spectrum said.

"The Hayden initiative would grant broad implementation and enforcement authority over these and all other environmental laws in California to a single individual with a multimillion dollar budget, whose authority would supersede the state legislature, executive branch, and local government," the consultant said.

SURVEY RESULTS

The poll conducted in March 1990 by Charlton Research Co. for the council was of 1,000 California registered voters, featuring a margin of error of 3.1 % in 95 of 100 cases.

It asked people to vote on the initiative, then provided pro and con arguments, followed by another vote on the measure.

In the first ballot, 76% of voters favored the initiative, 16% opposed it. In the second ballot, 40% favored the measure, 56% opposed it.

The arguments that held sway over those polled were that the initiative:

Is too expensive and creates a heavy burden on taxpayers and consumers.
Is designed by politicians and is self-serving and politicizes the environment "by creating a superpowerful environmental czar-a job initiative chairman Tom Hayden reportedly seeks for himself," the council said.
Has too many elements for one initiative and results in unintended consequences.
Forces numerous changes in California lifestyles.

EXTERNAL EVENTS' EFFECTS

The poll also took note of major environmental events that occurred just prior to the poll: spraying in southern California for the Mediterranean fruit fly early in the year and the Feb. 7 oil spill off Huntington Beach, Calif.

Of those polled, only 25% were aware of an environmental initiative on the November ballot, and 51 % were aware of any serious environmental problems in the state.

"In light of the Medfly spraying and the Huntington Beach oil spill, it seems amazing that the data showed 24% had no awareness of an initiative or of an environmental problem facing California this year," the council said.

Further, the poll showed, only 3-4% of voters could identify a topic that was related to the Hayden initiative and less than 5% could identify the Huntington Beach spill or the Medfly spraying as an environmental problem they were aware of today.