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California looks at millionaire tax to pay for clean vehicles and wildfire prevention

Governor Gavin Newsom — who typically champions the environment and carbon neutrality — opposes Proposition 30.

SACRAMENTO, Calif. (CN) — California lawmakers on Wednesday stared down a controversial measure aimed at taxing millionaires to fund greenhouse gas emission reduction programs, meet electric vehicle usage goals and beef up wildfire fighting resources.

Proposition 30 will ask voters if people earning more than $2 million a year should be taxed, with revenue funneled into zero-emission vehicle purchases and infrastructure. Nearly half would go to people in lower-income communities. Another piece would help install charging stations at apartment buildings, with the remainder funding wildfire prevention efforts. 

The measure’s main opponent remains Governor Gavin Newsom — who has made it clear he does not support this strategy to push his initiative to drive down greenhouse gas emissions. Newsom has called Proposition 30 a “cynical scheme” concocted by the ride-hail company Lyft, Politico reported. He framed the measure as a benefit for Lyft, which has spent at least $15 million campaigning for it.

But the company’s environmentalist allies say the governor is trying to stand in the way after he ordered swapping gas cars for electric by 2030. California has the nation’s biggest vehicle market, and paying for this transition remains a major issue. 

A joint state Senate hearing Wednesday allowed lawmakers to hear different sides and give feedback. “The ink is dry” for amendments, according to state Senator Anna Caballero, a Democrat from Salinas who moderated the hearing.

State Senator Ben Hueso, a Democrat from Logan Heights, said lawmakers should consider whether Proposition 30 can be adjusted to account for President Joe Biden’s efforts to pass the Inflation Reduction Act, containing around $300 billion for clean energy funding and “tens of billions for EV incentives.”

Ross Brown of the Legislative Analyst's Office said the measure could create up to $4 billion in revenue for zero-emission programs, on which the state currently spends hundreds of millions annually. The state also spends $2 - $4 billion annually on firefighting and could see $700 million to $1 billion added by Proposition 30. 

A pie chart shows the intended way Prop 30 would allocate revenue forms axing people earning more than $2 million per year in California. (Legislative Analyst's Office via Courthouse News)

“It’s the only progressive well tax on the ballot this November," said Oscar Garcia of California Environmental Voters, adding the group supports the bill as a way to transition people out of carbon-burning vehicles, particularly in low-income communities of color. 

Will Barrett, senior director for clean air advocacy at the American Lung Association said the state has six of the 10 smoggiest cities in the U.S. and eight of the cities most affected by particle pollution. 

“This ballot measure gets to the heart of sustained investments in addressing the major sources of pollution,” he said. 

Scott Wetch of the International Brotherhood of Electric Workers said current state programs with federal tax incentives will only accomplish 70% of the goal to have 100% zero-emission vehicle sales by 2045, and the measure’s revenue will fill the gap. 

Wetch added that Biden’s Inflation Reduction Act offers only about $14.2 billion for all states to address clean energy infrastructure, zero-emission projects and firefighting, but Proposition 30 can generate “$80 to $100 billion” for California alone.

But opponents continue to push back on the measure’s language. 

Scott Kaufman of Howard Jarvis Taxpayers Association said if more funding is needed for greenhouse gas reduction programs, the state’s surplus should cover it and “not a targeted tax for special interests.”

Katie Hardeman of California Teachers Association said her organization thinks Proposition 30 would contribute to the likelihood public education would see cuts in a recession. She also claimed the initiative does not guarantee protections to low-income people and wealthier people are more likely to buy electric vehicles. 

Preston Young of the state Chamber of Commerce said the new tax would affect small businesses, and that people it applies to “pay 64% of income taxes.”

“You’re driving away taxpayers who provide the economic cushion during tough times,” Young said. 

State Senator Maria Elena Durazo, a Democrat from Los Angeles, said she is not seeing proof that Proposition 30 will reach low-income communities. She noted past programs that made similar promises “have really not been accessible.”

“How do we make sure the program meets its intent reaching those people of low income?” she asked. 

When Wetch said the program mandates using nearly half of revenue for low-income communities and electric vehicle infrastructure, Durazo replied, “I’m sorry I don't have the same optimism and the same faith that it will actually get to our low-income communities.”

State Senator Henry Stern, a Democrat from Calabasas, said he thinks the need to improve climate mitigation and resilience is not a big enough priority for the state. He believes the measure can help commuters' costs at the gas pump and prevent more destroyed communities and lung illnesses from wildfires.

“We have a trillion-dollar liability over the next 40 years and we’re currently not accounting for that,” he said. 

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