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California ballot measure to fund EV subsidies beset by strange political divide

Governor Gavin Newsom has appeared in campaign ads urging voters to reject Proposition 30 — a curious move from the Democratic politician who has staked his career, in part, on beating climate change.

(CN) — You might think that a ballot measure to raise income taxes on millionaires to fund electric vehicle subsidies would be a no-brainer in California. But passage of the referendum, which is on the ballot this November, is far from assured.

For one thing, Governor Gavin Newsom — the same governor who signed an executive order banning the sale of new gas-powered vehicles starting in 2035 — not only opposes Proposition 30, but has been actively campaigning against it, even going so far as to appear in campaign ads blasting the initiative. In the ads, he calls the proposition a "Trojan horse... devised by a single corporation to funnel state income taxes to benefit their company."

The environmental groups that helped write the measure are gobsmacked.

"We were shocked to see him align with the Republican Party and the billionaires that are funding the opposition," said Max Baumhefner, a senior attorney with the Natural Resources Defense Council. "I can’t speak to his motivations. All I can say is his claim that Prop 30 was devised by a single company is false."

Proposition 30 would raise income tax on individuals making more than $2 million a year by an additional 1.75% (those earners are currently taxed by the state at a rate of 13.3%). The estimated $3 billion to $4.5 billion generated would go to zero-emission vehicle subsidies and infrastructure like charging stations, as well as wildfire prevention and hiring more firefighters. The exact dollar amount that electric vehicle buyers would save is something of a moving target, to be adjusted over time by the California Air Resources Board and depending on a panoply of conditions. Low-income drivers buying an electric car would receive more, as would commercial vehicle drivers and those who drive more. There would also be more money for people who replace older, high-polluting vehicles.

Despite the complicated math involved, backers of the measure are confident that the price of a zero-emission vehicle would be cheap enough to make it competitive with any other comparable car.

"It should make it so that it’s a no-brainer to buy an electric car," said Baumhefner.

A myriad of environmental groups, unions and Democratic politicians back Proposition 30, as does the Democratic Party. But the campaign is being funded almost entirely by one company: Lyft, the number two ride-hail company which has thus far spent around $45 million on it.

That's because ride-hail companies will have to be 90% electric — 90% of the miles their drivers log will have to be zero emission — by 2030. Uber, which has not taken a position on Proposition 30, has been offering drivers incentives to switch over to electric vehicles. Lyft is hoping that if the measure passes, drivers will be convinced to make the switch by themselves.

"It's essentially putting an income tax on the ballot that would help one particular company," said Matt Rodriguez, the campaign manger for No on 30. "This is a business expense that a company is asking voters to pay for."

Steve Maviglio, the spokesman for Yes on 30, disagrees.

"Both companies and everyone in California benefits," Maviglio said. "It's for an industry."

Maviglio has suggested the real reason Newsom opposes Proposition 30 has nothing to do with Lyft or Greeks bearing gifts, and has everything to do with his presidential ambitions.

"There has been speculation that he doesn’t want to raise tax when he runs for president," Maviglio said.

But Newsom is far from the only opponent of Proposition 30. The state's powerful teacher's union, the California Teachers Association, also opposes the measure. That's because by law, 40% of all state revenue goes to public education. Of course, the state has an array of fees like surcharges on real estate sales and DMV renewals that are earmarked for non-education things. But traditionally, at least part of all income tax goes toward education. Teachers are worried that Proposition 30 would set a bad precedent.

Others worry about opportunity cost. There are only so many times you can raise taxes — even on millionaires.

"There’s a lot of things that might help a lot of different people," Rodriguez said. "It really is a threat to the general fund."

A common criticism of ballot measures is that they can only be undone by another ballot measure. And so funding streams get tied up by the voters, one after another, until the Legislature has little room to work with in times of crisis.

Backers of Proposition 30 respond that climate change is the crisis.

"It’s on the ballot because this is something the Legislature’s incapable of — making a long-term commitment to clean air and climate action," Maviglio said. "The Legislature only thinks in two-year budget cycles. And unfortunately, clean air gets tossed to the bottom of the pile."

A recent poll by the Berkeley Institute of Governmental Studies found Proposition 30 ahead with likely voters, 49% to 37%, with 14% undecided. If that sounds like good news for the supporters of the initiative, it's not. The conventional wisdom is that most undecided voters vote 'no' on election day.

"You really need to be above 50%," said Mark DiCamillo, director of the Berkeley IGS poll. "When voters are undecided, they tend to vote 'no.' It’s ahead, but I would say it’s not comfortably ahead."

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