Next on the Audit List? The California Air Resources Board

Last week, the Department of Finance concluded a quick audit of the Special Funds portion of the budget that, whether sufficient to look into the situation or not, hopefully will start a trend in performing audits on government program revenues and costs. Next in line should be an audit on the California Air Resources Board, which the Joint Legislative Audit Committee is considering in a hearing today.

Many in the business community are concerned with the lack of transparency on CARB’s responses to information regarding the use of administrative fees charged to California businesses under AB 32, the landmark greenhouse gases law.

In a letter to the Chair of the Audit Committee, a number of business groups requested the audit to establish “accountability, transparency, and credibility as CARB embarks on its effort to implement a complex, multi-billion dollar, greenhouse gas trading market that will involve credit exchanges for offsets and emissions allowances issued by foreign governments.”

The letter cited a number of examples of lack of information in CARB’s use of a two-year old Implementation Fee as well as other concerns, among them:

  • Documents released by CARB in 2009 and 2010 only confirmed 46% of the AB 32 implementation expenditures CARB claimed for FY 2007-2008
  • Documents released by CARB in 2009 and 2010 only confirmed 36% of the AB 32 implementation expenditures CARB claimed for FY 2008-2009.
  • No expenditures for salaries, totaling $26,698,352 over two years, were confirmed by the documents provided.
  • No information from CARB that would purport to explain how CARB spent the $35 million loaned to it from the Recycled Beverage Container Fund for FY 2009-2010.
  • How CARB spent any funds related to AB 32 implementation in FY 2010-2011.

Considering the demands for audits made by the administration and members of the legislature on the Park Special Funds, such actions can help lead to clearing the air about how much money the government actually has and how it is spent.

We should not stop that advance for transparency of government funds now. The costs associated with AB 32 would dwarf the dollars found unaccounted for in the Special Funds. More importantly, the business community needs to have faith that fees paid for administering the regulations are done fairly and openly.

The Audit Committee can take an important step in improving the relationship between CARB and the business community by authorizing an audit.

(Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee. Originally posted on Fox & Hounds.)