Gov. Brown's cap-and-trade spending plan angers businesses

◼ He aims to spend $1 billion from the auction of greenhouse gas emission credits to help shrink the budget shortfall. Industry groups call that a back-door tax hike. - Marc Lifsher/LA Times

Gov. Jerry Brown has found a new pot of money to help him fill a $9-billion hole in his proposed budget: $1 billion from auctioning credits to allow California companies to emit greenhouse gases.

But business groups are already denouncing Brown's plan as a back-door tax increase that they intend to challenge in court if the proposal is approved as part of the state budget for the fiscal year that begins July 1.

"At a time when the public is concerned about jobs and the economy, the budget proposes a new tax on California businesses for climate change activities," said Dorothy Rothrock, vice president of the California Manufacturers and Technology Assn. "The anticipated $1 billion is not windfall revenue. The funds will be paid by California employers suffering the worst recession since the Great Depression."

The so called cap-and-trade system is a critical piece of AB 32...