California’s attempt to finance electric vehicles was a disaster – In June, a measure to tax California’s wealthiest citizens to fund wildfire fighting and electric vehicles was on the state ballot. It seemed clear that it was a winner at first. It was supported by hundreds of environmental and health organizations, unions, firefighters, elected officials, and other public and private sector leaders. It was supported by the American Lung Association, Union of Concerned Scientists and the California Democratic Party, with 63 per cent of voters saying that they would vote for the measure in November.
California would be the state that would support a tax on climate action. Nearly two-thirds believe that local officials should do more for climate change mitigation. However, Californians rejected the idea on Tuesday with 59 percent of them voting against it.
What went wrong? What happened to an extremely popular initiative for environmental reform in a state known for being the most progressive on climate change?
The bottom line is that a governor broke ranks, billionaires launched an anti-government campaign, and a corporation suffering from a PR problem became a serious liability. Let’s dig in.
Surprise twist: It happened in July, just after the California Democratic Party had endorsed Prop 30. Governor Newsom and California Teachers Association declared their opposition. Teachers association criticized the “special interest lockbox” placed on taxes that traditionally funded schools. Governor Gavin Newsom focused his attention on Lyft, the primary funder of the proposal. He began campaigning against the measure and starred in a television ad asking Californians to vote no to “[Lyft]’s sinister scheme to grab an enormous taxpayer-funded subsidy.”
Catherine Wolfram, a University of California Berkeley climate and energy economist, said that Gavin Newsom is a credible climate advocate in the state. “The fact that Newsom came out against Prop 30 was something that voters were interested in.”
California law requires rideshare companies that use electric vehicles to log 90% of their miles by 2030. Newsom also accused Lyft, accusing it of trying to pay the taxpayer for its electric transition. After Newsom opposed the measure, the measure started to slip in the polls.
Many Californians are concerned about corporate involvement in the drafting and promotion of legislation. Lyft and Uber introduced Prop 22 in 2020 to reclassify workers into contractors. This removes companies from the responsibility for providing overtime pay, minimum wage, and other benefits.
However, Prop 30 was not the Lyft car Newsom claimed it to be.
The clean transportation groups that devised the measure said Lyft was a major funder after the basic contours were established. Steven Maviglio, who was consulted for the press strategy, stated that there was no specific mention of Lyft in the proposal. “The measure would have been beneficial to low- and middle-income Californians, by subsidizing electric cars and installing charging stations within their communities. Lyft would have been benefited in the fact that its drivers are Californians.” 50 percent of the measure’s EV funding was designated for low-income communities which are most affected by air pollution.
To reach California’s climate goals, Newsom would have used the money from the Prop 30 tax to fund the California Air Resources Board, Energy Commission and CAL FIRE. These include a 40% reduction in greenhouse gas emissions by 2030 and 100% EV sales by 2035 in a state in which transportation accounts for half of California’s greenhouse gasses and contributes to the poorest air quality in the nation.
Other than Lyft’s involvement in the matter, Newsom and other Prop 30 opponents also fought against it. Billionaires were some of the largest funders of the opposition campaign. They would have been negatively affected by the 1.75 per cent tax increase on incomes above $2 million per year. Netflix founder Reed Hastings, Mark Heising, Sequoia Capital Venture capitalist Michael Moritz and Catherine Dean were the top donors to No to Prop 30. Govern for California is an influential donor network primarily composed of tech executives and venture capitalists from the Bay Area. Heising, Dean, Hastings and Dean were all big Prop 30 contributors. Some even exceeded the allowed donation limits.
Newsom expressed concern about the state’s increasing dependence on high-income earners for funding. California’s income taxes make up the majority of its revenue. According to CalMatters, the 0.2 percent who earn more than $2 million, which is taxed at 13.3 per cent of their income, make up 30% of the state’s income tax revenue. Because it is tied to volatile markets, this pool can prove unstable and volatile. Others expressed concern about the exodus of high-income earners from California. However, studies have shown that the majority of those moving out are low- or middle-income residents who cannot afford to live in California. High-earners are the ones moving in.
Opponents also claimed that California ballot measures, which carve out a portion of the budget to address specific issues, limit the ability of the governor or the legislature to allocate funds. Wolfram stated that climate change is a huge topic with many interrelated issues. “Ballot proposals are not the best way to implement climate policy.”
Lyft was ultimately the biggest topic of discussion for the opposition. Matthew Rodriguez, campaign manager for Prop 30, stated that Lyft was the most talked about issue on the opposition’s side.
Maviglio has advised on strategies for California environmental measures such as the plastic bag ban or the water bond and warned against using the vote to determine voter beliefs about climate change or progressive taxes. It is much easier to get a no vote on a ballot measure than a yes vote, he stated, provided the opposition can create doubts in voters’ minds, which they did in this case by focusing on Lyft. Bill Magavern (Policy Director at the Coalition for Clean Air) said that the conversation wasn’t about the policy.
What is the next step for EVs in the state’s future? There is money available for clean transportation. California legislators approved $54 billion worth of climate spending, with $10 billion for electric vehicle funding. This was after Newsom’s lobbying. EV incentives can also be funded by federal Inflation Reduction Act funds, and $384 million is expected from the Infrastructure Bill to fund charging stations in California.
Experts say it isn’t enough. Magavern stated that the $10 billion figure is a promise and not a law. He also noted that previous state-funded electric vehicle subsidies have always run out of money. The lack of charging stations is also a major obstacle to the mandated transition to electric trucks in the shipping sector. Despite having enjoyed large budget surpluses in the past two years, Governor Newsom warned of restrictions next year. Magavern is concerned that programs related to climate change will be the first to be eliminated.
Magavern stated that “we are in a crisis when t it comes to climate, air pollution and wildfires.” We needed to do something different in order to meet the emergency. It was impossible for a tax increase to pass the legislature, so it needed something similar to a ballot initiative.
New York passed a $4.2 billion bond bill for flood risk reduction, conservation, water quality infrastructure and climate change mitigation. It will allow the state of New York to borrow money to finance projects. The bill is supported by a large coalition from labor and environmental groups and is expected to create 84,000 new jobs in New York State.
“New Yorkers said yes” to investing in clean water, clean air, reduced flooding and jobs,” stated Kate Boicourt (director of climate resilient coasts, watersheds, for the New York chapter, Environmental Defense Fund. “This act…is a win-win for all and will have an impact on communities across the state for many generations to come.”