Your eyes on California Government

John Seiler:

I wrote back in July contrasting North Dakota’s rock-bottom unemployment rate with California’s second-highest rate among the 50 states. I blamed the Golden State plight on our high taxes and strangulating regulations. A reader responded:

Do you know much about North Dakota? It’s in the midst of an oil boom — with money all but literally being pumped out of the ground like water. Plus, farm commodity prices are great.

Of course, California is the country’s leading agriculture center, so our farmers also benefit from commodity price hikes (although consumers are hurt).

Our friend and colleague Brian Calle just reported on how California, too, could enjoy a new energy boom like North Dakota — except for our state’s insane regulations:

California’s economic slide is one of choice and consequence, not of necessity. The state still possesses the resources for prosperity, even today, but policies advanced by ideologues, bureaucrats and political zealots in the state capital have tarnished the Golden State. Energy policy and unseen promises of an eventual green job boon are among the culprits.

North Dakota, by contrast, illustrates, as it rapidly becomes the economic envy of the nation, how a different approach to public policy bolsters economic activity and job creation and how traditional energy procurement stokes the state’s economy….

North Dakota also has a more sensible corporate tax rate which ranges from 2.1 percent to 6.4 percent for companies with income over $50,000. By contrast, California imposes an 8.84 percent income tax for corporations, and 10.84 percent for banks and financial institutions.

The North Dakota economic boom is a result of oil production. Drilling restrictions in Alaska, the Gulf of Mexico, and even Canada (the Keystone pipeline, opposed by environmentalists) have given North Dakota an opportunity to grow its oil industry, already ranked fourth in the U.S., accounting for 6 percent of domestic oil production. The growth has begun trickling down to South Dakota, a state that imposes no corporate or personal income tax.

North Dakota has no energy efficiency resource standard for electricity or natural gas, nor does it impose a mandatory statewide residential or commercial energy code, according to the Midwestern Energy Efficiency Alliance.

North Dakota’s lawmakers have been noticeably hands-off in regards to coal and oil production, letting the market dictate demands and consumption of energy.

Draconian California Laws

California lawmakers, in contrast, often impose laws much stricter than federal standards (the state onerous labor code is just one glaring example) and have worked aggressively to subsidize alternative energy sources and mandate their uses. Also numerous unelected, bureaucratic boards and agencies such as the California Air Resource Board, the California Coastal Commission, the California Energy Commission and the California State Lands Commission (just to name a few) have various jurisdictional authority over various matters.

Even though the Golden State has vast oil and gas reserves offshore – estimated at over a billion barrels – those resources are essentially off-limits because, for example, California’s State Lands Commission has disallowed drilling for over 40 years, and the California Legislature codified their ban decision in 1994.

Additional legislative actions, like the passage of Assembly Bill 32, the Global Warming Solutions Act of 2006, have made matters worse. AB32, for example, mandates the reduction of greenhouse gases in the state and imposes onerous standards and increases costs on California businesses and is thought to cost the state economy $183 billion….

The North Dakota Model

California legislators would better serve residents in the state by employing the North Dakota model to energy. United State Senator John Hoeven of North Dakota said his home state’s approach to energy is to “develop all of our energy resources, both traditional and renewable … in a way where we incentivize new technologies to create more energy more dependably and more cost-effectively with good environmental stewardship.” If California adopted similar approaches, perhaps the state’s fiscal health would once again be the envy of the nation.

North Dakota reaps the vast economic benefits of traditional energy procurement and production as well as agricultural spoils, while the Golden State reels from ideological obstinacy where its legislators kowtow to special interests and frolic in dream world where green jobs save the day. North Dakota’s approach to energy policy has created a boon allowing the state to achieve notable economic accomplishments, especially as the rest of the nation, and world, lags.

Right.

The choice is simple: Jobs and sensible environmental policies vs. unemployment and environmental extremism.

It’s time to move there. I’m packing my bags.

But I’ll wait for spring.

Dec. 21, 2011

Tags: AB 32, Brian Calle, energy, fracking, John Seiler, North Dakota