Tempers flare in Prop. 23 debate

Aztec Solar Inc. chief executive officer Ed Murray hears “AB 32” and thinks 500,000 new jobs.

Mention the bill to Marcos Gouveia, owner of Capitol City Granite, and he rants that pick-pocketing by government regulation will drive him out of business.

Some small businesses support California’s tough law to cut greenhouse gas emissions. Others hate it. And that’s creating plenty of passion on both sides of Proposition 23 on the November ballot.

The initiative would suspend AB 32 until the unemployment rate in California drops to 5.5 percent or less for four consecutive quarters. The statewide rate was 12.8 percent in July.

The California chapter of the National Federation of Independent Business supports the measure; Small Business California, a grass roots group based in San Francisco, opposes it. So does the Sacramento Metro Chamber. CalChamber hasn’t taken a position.

NFIB and other supporters applaud the goal of AB 32 but say the current economic climate makes it the wrong time to impose new rules and costs on businesses that might have to cut jobs to comply.

Suspending the law will hurt progress already made, put new jobs at risk and send a confusing message to businesses, counter Small Business California and other opponents.

Still others have yet to consider the issue and make up their minds.

‘I’m stretched out’

The state Legislature approved — and Gov. Arnold Schwarzenegger signed —

AB 32, the landmark environmental law, in 2006. It seeks to reduce greenhouse gas emissions to 80 percent of 1990 levels by 2050.

The law includes reductions in emissions, market-based compliance measures such as a cap-and-trade system and voluntary actions.

Good idea, but not now, opponents argue. To make sure it’s not now, they collected thousands of signatures to place Proposition 23 on the fall ballot.

“Small-business owners do want to promote a healthy, clean environment for California for themselves, their families and future generations,” said John Kabateck, executive director of NFIB California and co-chair of the Yes on Proposition 23 campaign. “Unfortunately, AB 32 is the wrong approach at this time to achieve that admirable goal. It imposes onerous new mandates and costs on small businesses at a time when they can least afford it.”

The No on Proposition 23 campaign estimates AB 32 has cost the state more than 1 million jobs.

Proposition 23 will delay implementation of the law but not kill it, Kabateck added.

“All it says is press the pause button and hold off on this costly regulation until there are jobs and a revived economy,” he said.

Four quarters with a statewide unemployment rate of no more than 5.5 percent is not an unrealistic goal, Kabateck said.

“When the governor signed it, unemployment was at 4.8 percent … . Unless one has been living in a cave, it’s hard not to realize times are bad.”

Bad enough that Gouveia at Capitol City Granite says he can’t afford to pick up additional costs.

“I’m stretched out as much as I can be,” he said.

It cost Pete Evgenikos at E-Z Painting Inc. in Sacramento $8,000 to buy a new compressor last year after he was told the motor on his sandblaster was too big.

“I understand this is good for the environment,” he said. “That’s fine; everybody should be healthy. But there are so many regulations. It’s ‘do this’ or ‘do that’ or they’ll penalize the heck out of you.”

Jim Pardini, CEO at Hills Flat Lumber Co. in Grass Valley, owns two lumber home centers. Both stores have solar panels on the roof and one has a geothermal system to reduce energy costs. Yet Pardini sees at least two things wrong with AB 32.

He’s not sure about the science behind claims of global warming. “Iffy at best,” he says, and now’s not the time to impose costly rules on small businesses. Pardini figures it will cost him $150,000 to retrofit his fleet of trucks to comply with the law.

“Either I’ll borrow the money, which may not be possible, or I’ll have to lay people off,” he said.

‘Giant step backwards’

Other small-business owners see AB 32 as an opportunity for research and innovation that will create new jobs.

Efforts to help small businesses reduce their energy use and costs through programs such as on-bill financing are paying off, said Scott Hauge, president of Small Business California. On-bill financing allows small businesses to finance energy efficiency improvements through their monthly power bill.

“For me, it’s a business opportunity, not just a passion,” said Warren Smith, a co-founder of the Sacramento River Cats baseball team and CEO at Clean World Partners LLC. The Sacramento company is developing waste conversion systems to divert waste from landfills, capture greenhouse gas emissions and produce renewable energy.

Smith claims AB 32 and other environmental initiatives opened his eyes to new possibilities and he discovered technology that “can actually make a difference.”

“I’m a Republican and believe the business community can do more,” he said. “Everybody is asking what we do. It’s the American way and challenging to get ahead of the curve. I see this as the land of opportunity, not the land of regulation.”

California is moving forward with efforts to advance clean energy and improve air quality, said Murray from Aztec Solar in Rancho Cordova. The company provides solar systems for homes and businesses.

“I think Proposition 23 will be a job killer, repeal the good work done so far — and there’s no way we’ll get it back,” he said. “It’s a giant step backwards.”

Bob Schilling, CEO at Schilling & Maure Inc., a Long Beach consultancy that coaches executives, calls Proposition 23 “a scam to gut environmental legislation.” California’s unemployment rate isn’t going to drop to 5.5 percent anytime soon, he predicted.

The statewide unemployment rate has been in the double digits since January 2009. The rate met the Proposition 23 requirement of 5.5 percent or less for four consecutive quarters only twice in the past 20 years: in 2000 and 2006.

“Remember, this thing must be done eventually — it’s the environment we’re talking about,” Schilling said. “People think regulation is a pain in the you know what,” he added. “There’s a policy discussion to be had about how this stuff is implemented, but (Proposition 23) is not the way to do it.”