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BEALL.JPGGov. Jerry Brown's proposal to shift $500 million in cap-and-trade fees levied on business for greenhouse emissions into the state budget ran into bipartisan opposition Tuesday.

The two Democrats and one Republican on a Senate budget subcommittee denounced Brown's plan, which was included in a revision of his state budget last week.

The $500 million loan to the general fund is designed to partially offset the Brown administration's forecast that revenues will dip below earlier projections in the 2013-14 fiscal year by $1.8 billion, but members of the committee said it made little sense since the same budget proposes to repay some of the state's "wall of debt," which is mostly money owed to schools.

Money from the fees is supposed to pay for programs that reduce greenhouse gases, and the Legislative Analyst's Office had warned in the past that using the fees for other purposes could be illegal..

"It's a little bit of an odd exception to reducing the wall of debt,' Sen. Jim Beall, D-San Jose, the subcommittee chairman, said. Republican Jim Nielsen of Gerber and Democrat Hannah-Beth Jackson of Santa Barbara joined in the criticism. The committee was poised at one point to formally reject the loan, but decided to leave the issue open instead.

The hearing was conducted on the same day that the Air Resources Board revealed results of its third auction of carbon emission credits, raising $280 million. Business groups have complained about the program, saying it amounts to a new tax burden that will inhibit economic recovery. Environmentalists, meanwhile, have been critical of the proposed loan, saying it undercuts the purposes of the program.

PHOTO CREDIT: Sen. Jim Beall, D-San Jose shown in the Senate chambers in March, was critical of Gov. Jerry Brown's plan to shift cap-and-trade funds to the state general fund.


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