Local Economist Assails Energy Laws

By on May 19, 2014
Inland Empire News for April 2.001

A report says many of those regulations are keeping people poor by killing blue-collar jobs, especially in the Inland region. The study’s author says the AQMD is largely responsible for the trend, but an official with the agency says that’s not the case.

It’s been repeated so often that it long ago became accepted wisdom, particularly among the state’s business community: California is so over-regulated that businesses are leaving the state in droves, and businesses outside the state don’t want to move here.

No one has sounded that mantra more than Inland economist John Husing, who has been analyzing economic trends in Riverside and San Bernardino counties for more than 50 years, dating back to his days as an associate professor at San Bernardino Valley College.

The culprit is the state’s energy and environmental laws, which have all but destroyed blue collar jobs throughout the state – and the Inland Empire in particular – the region that needs them the most, according to Husing.

“The state has been passing laws for years, and for years [lawmakers] haven’t been looking at the unintended consequences of those laws,” said Husing, chief economist with the Inland Empire Economic Partnership, the non-profit agency charged with attracting businesses to the two-county region.

“There are competing interests, obviously, but the state legislature has never tried to strike a balance between the economy and the environment.”

Earlier this month, Husing released a 17-page report, “California Energy Policy & The Inland Empire” on behalf of the economic partnership in which he spells out his views on the state’s energy and environmental laws and calls for a total reexamination of those policies, all the way down to basic anti-pollution laws.

Husing said the report was first suggested by members of the California Business Roundtable, a non-partisan group made up of executives from the state’s largest industries that promotes job growth. In it he charges that lawmakers, especially in the coastal counties have not been sensitive enough to the plight of areas like the Inland Empire, which are still feeling the effects of the recession.

“Much of the force behind these policies has come from the state’s wealthier coastal counties,” Husing states in the report, which available on the economic partnership’s website. “The unasked question is what the growing results of these policies have been for families of inland areas like the Inland Empire.”

Several days before Husing’s report was released, Toyota announced it will move its operation in Torrance, where 3,000 people are employed, to a new North American headquarters under construction in Plano, Texas, a Dallas suburb.

Though Torrance is a long way from the Inland Empire, the move was another sign to some people in the business community that California is losing jobs to other states because of high taxes and overregulation.

“I wasn’t the least bit surprised,” Husing said of Toyota’s departure, which will happen in phases during the next three years. “I only wonder what took them so long.”

The Inland Empire is particularly vulnerable to job-killing overregulation because about 45 percent of its adult population has no education beyond high school, meaning the region is desperate for blue collar jobs.

Yet despite having a large labor pool for businesses to draw from, and plenty of affordable land for business expansion, the Inland region has a 9.4 percent unemployment rate: the only similar-sized metropolitan area in the United States with unemployment that high is Providence, R.I., according to Husing.

“It’s true that we have families in the Inland Empire that are marginally educated,” Husing said during an interview. “What are we supposed to do, let them starve? They need jobs. You have to wonder who the legislature listens to on these issues.”

As he often does, Husing saved his strongest word for the South Coast Air Quality Management District, the agency that has come to embody the concept of too much regulation among much of the Southern California business community.

While conceding that the district has done much to reduce air pollution in Southern California, the AQMD – which was formed in 1976 to regulate stationary sources of air pollution in Southern California – has never been too concerned with whether its policies kept some people out of work, according to Husing.

Because of the AQMD, diesel fuel taxes are higher in California than they are in other western states. That hurts the Inland Empire because about 10 percent of the Inland Empire’s workforce is employed in the logistics industry, Husing said.

Also, the district wants to impose higher fees on distribution centers, fees that would be based on the amount of traffic that each distribution center attracts, a proposal that would have huge negative ramifications in the Inland region.

Besides the people who already work in logistics, that sector accounted for 18.8 percent of the region’s job growth last year. Should those fees ever be implemented, development of warehouse-distribution centers in the two-county region would slow dramatically, or maybe even stop, Husing said.

“The AQMD wants to shut off all truck traffic into the Inland Empire,” Husing said. “That is their solution to our air-quality problems. But 2014 is not 1987. The air is a lot cleaner than it used to be.”

But the choice isn’t a black or white option between clean or few environmental regulations placed on business that would otherwise add to air pollution and other environmental problems, said Sam Atwood, spokesman for the AQMD.

“We’ve never approached these things as an either-or choice, and when people say otherwise it’s simply not true,” Atwood said. “We also have a federal mandate [from the Clean Air Act of 1970, which was amended 20 years later] to do everything we do.”

The AQMD could not stop the development of logistics operations, in the Inland Empire or anywhere else, even if it wanted to, Atwood said.

“We don’t have anything to do with land-use authority,” Atwood said. “Cities and counties make all of those decisions. We might comment on their environmental impact report, but we have no binding authority in that area.”

Atwood also challenged the idea that Toyota is leaving Torrance because of high taxes or environmental regulations.

“Look at the quotes from the people who decided to make the move,” Atwood said. “It was about geography and the chance to consolidate their operations, not higher taxes.”