A California measure would tax the rich to fund electric vehicles. Why is the governor against it?
Two years ago, California’s governor, Gavin Newsom, issued an executive order banning the sale of new gas-powered vehicles by 2035.
This year, he’s opposing a ballot measure to fund the transition to electric vehicles – siding with Republicans and against fellow Democrats, environmental groups, firefighters and labor unions.
The governor’s counterintuitive position could be a political gambit. It may also doom the measure; support for it appears to have dropped starkly after Newsom cut an ad against it.
The measure, Proposition 30, would hike taxes by 1.75% on those earning $2m or more annually, raising between $3bn and $5bn annually to subsidize households, businesses and schools; buy zero-emission cars, trucks and buses; fund infrastructure to charge electric vehicles; and bolster wildfire prevention efforts.
Proponents of the measure, including the coalition of environmental and labor groups that developed it, say the tax would provide urgently needed funds to hasten the transition to zero-emission vehicles, and reduce the disproportionate burden of pollution on low-income, minority communities across the state. According to the American Lung Association, which has endorsed Prop 30, the US could save 110,000 lives and $1.2tn in public health costs by 2050 if it swaps gas-powered vehicles for zero-emissions cars.
Newsom, and the proposition’s opponents, claim it is a corporate carveout for Lyft, the ride-hailing company that has backed the measure and helped fund its campaign.
“Prop 30 is being advertised as a climate initiative,” Newsom says in an advertisement against Prop 30. “But in reality, it was devised by a single corporation to funnel state income taxes to benefit their company. Put simply, Prop 30 is a Trojan horse that puts corporate welfare above the fiscal welfare of our entire state.”
The message left some of the organizers and activists who helped write the measure stunned.
“It’s just false,” said Denny Zane, the founder and policy director at Move LA, a public transit advocacy group that helped develop the proposition. Lyft joined the effort to promote the proposition after environmental groups and policymakers came up with the idea, he
said, but the company did not “devise” the proposition.
Overhauling the transportation infrastructure
Lyft has given more than $15m to support the measure and funded signature-gathering to get it on the November ballot. Though it wouldn’t benefit directly from the proposition, it and other rideshare companies face a 2030 regulatory deadline to transition the majority of their fleets to EVs. Prop 30 could help Lyft drivers, who are responsible for providing their own cars, purchase zero-emission vehicles.
“It’s absurd to say we’re granting some sort of carve-out specifically for Lyft,” said Bill Magavern, the policy director for the Coalition for Clean Air, a statewide organization focused on air pollution issues.
Proponents of the funding measure point out that the $10bn that Newsom’s budget has already allocated to EV subsidies and infrastructure would help Lyft drivers in the same way. And funds from Prop 30 would ultimately be funneled to the California Air Resources Board, the California Energy Commission and Cal Fire, the state’s firefighting agency, which would allocate the money to various programs.
Newsom argues that California’s tax revenues are “famously volatile”, and the measure would make the state’s finances even more unstable. A wealth tax, the governor says, wouldn’t be the best way to fund the programs Prop 30 seeks to support. Moreover, he has noted that the state has already budgeted $10bn for electric vehicles specifically, and $54bn toward climate adaptation broadly.
But environmental and transportation experts say even such massive investments won’t be enough to transition the state’s transportation infrastructure.
Magavern and other environmental advocates instead see the governor’s stance on the proposition as a capitulation to wealthy donors. “You’ve got billionaires and their allies who don’t want to pay their fair share of taxes,” Magavern said.
Among the biggest donors to the “No on 30” campaign are William Fisher, hedge fund manager and Gap Inc director, and billionaire venture capitalist Michael Moritz, according to public records. Investment firm founder Mark Heising, who contributed the maximum allowable amount to Newsom’s 2022 re-election campaign, also contributed $1m to oppose Prop 30.
Joining these donors, Newsom, and anti-tax Republican politicians is the California Teachers Association, which opposed the measure because it circumvents a 1998 mandate that a minimum of 40% of the state’s budget goes to public education.
Opinion columnists and political experts have conjectured that Newsom’s siding with teachers and his traditional enemies – the Republicans – could help bolster the governor’s political future. Though Newsom has repeatedlydenied he has any intention of running for president, his recentnational-facing campaign ads have stirred up speculation to the contrary. Newsom’s position on Prop 30 could easily fit into a presidential pitch that he walks the line between California progressivism and nationally appealing moderation, those columnists and experts have argued, and that he doesn’t blindly side with his own party and sometimes works with Republicans and business interests.
The governor’s campaign did not respond to detailed questions regarding the political implications of this opposition to the proposition. “Prop 30 is fiscally irresponsible and puts the profits of a single corporation ahead of the welfare of the entire state,” the governor said in a statement.
Meeting the state’s zero-emission goals
California will have to make major investments if it wants to live up to its clean energy goals.
As more electric vehicles hit the road, the state has set targets to build an additional 170,000 public charging stations over the next three years. And California would need to invest in fortifying its already shaky electrical grid system.
“The governor did support record levels of investment in this year’s budget, which is great news, it’s what’s needed,” said Don Anair, an expert in zero-emission transportation technologies and infrastructure at the Union of Concerned Scientists, which supports Prop 30.
But it’s unclear how much will be invested in electric and zero-emission vehicles in subsequent yearly budgets, including after Newsom leaves office, Anair said. “We need a long-term, largescale source of revenue to meet the state’s goals.”
The need for investment now is urgent, Anair added. Even if the state phases out gas-powered vehicles by 2035, the cars, buses and freight vehicles already on the road now, or bought over the next few years will remain on the road for decades unless California incentivizes and subsidizes the purchase of zero-emission options.
One limitation of the proposition is that it doesn’t specify subsidies for ebikes and other programs to steer commuters away from cars altogether. Even electric cars are far less efficient than walking, biking and public transportation – they are energy and resourceintensive to build, and encourage urban sprawl. The mining of cobalt, lithium and other rare elements required to build EVs has raised environmental and human rights concerns.
In coming years, even more investments in public transit and urban infrastructure, as well as improvements in how EVs are made, will be required in order to truly address the climate crisis.
The proposition “is not going to solve all our transportation problems”, Anair said. But for now, transportation remains the largest source of greenhouse emissions in California. “So zero-emission transportation is critically important,” Anair said. “Climate change is already having impacts and the sooner we can start reducing our emissions, the better.”