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One of the most closely fought political races in California this fall is one that might at first have seemed like an easy choice in a state with a 50-year tradition of voters supporting strong environmental laws.
But with two weeks until Election Day, Proposition 30 is too close to call.
Billionaires are writing big checks to kill it. Gov. Gavin Newsom has bucked his own party to oppose it. And environmental and public health groups are gearing up a wave of advertising to try and bring it across the finish line.
If approved, the measure would increase state income taxes by 1.75% on income above $2 million for 20 years. The $3 billion to $4.5 billion raised annually would fund electric vehicle chargers and incentives to buy electric cars, trucks and buses. It would also pay to hire more firefighters and expand forest thinning projects and prescribed burns to curb wildfires.
Supporters say the tax will reduce smog and wildfires as climate change continues to worsen.
“About 30,000 people a year would be affected by the tax. It’s a very low number,” said Will Barrett, national senior director for clean air policy at the American Lung Association, a supporter of the measure. “But everyone – all 38 million Californians – will benefit.”
Proposition 30 is endorsed by the American Cancer Society and other health groups, as well as environmental organizations like Save the Bay and the Natural Resources Defense Council. The California Democratic Party; big construction unions; and San Jose Mayor Sam Liccardo, San Francisco Mayor London Breed, Oakland Mayor Libby Schaaf and Los Angeles Mayor Eric Garcetti, all support it.
But last month, it hit major turbulence.
Taxpayer groups, the Republican Party and some business organizations, led by the California Chamber of Commerce, came out in opposition, as expected. Their argument: California’s taxes already are too high, and because wealthy people pay the majority of California’s income taxes, upping their top tax rate from 13.3% to 15.05% — the highest in the nation — could drive them, and their companies, away to other states.
“I like the idea of more electric charging stations. Nobody disputes that,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “If they are that important, prioritize them in the general fund.
“Who doesn’t like clean air?” he added. “But we can have clean air without tax increases.”
Another prominent opponent is the California Teachers Association. The union says because the money that would be raised by Prop 30 isn’t subject to existing state rules guaranteeing a percentage of the general fund for education, it recommends a no vote.
The race was shaken up significantly in mid-September, when the governor joined the opposition.
Newsom has pushed for more climate and wildfire funding in Sacramento. He approved rules requiring all new passenger vehicles sold in California to be electric by 2035.
But he argues that the economy is softening, and California’s state budget heavily depends on income taxes from wealthy residents, often in the form of capital gains taxes from stock sales. Some of those rich taxpayers could leave the state, he warns.
“We’re already vulnerable to the macro-economic headwinds,” Newsom said in an interview on CNBC Sept. 14. “Wealthy folks, in particular, have many more options, nationally, as it relates to alternative states.”
Newsom also has singled out the largest donor to the Yes on Proposition 30 campaign, Lyft, the San Francisco rideshare company.
“Prop. 30 is being advertised as a climate initiative,” Newsom said in an ad. “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.”
Lyft could benefit from the new funding because last year, the California Air Resources Board passed a rule requiring Lyft, Uber and other ride-sharing companies to use zero-emission vehicles to drive at least 90% of their miles by 2030. The board did not specify whether the drivers, who are private contractors, or the companies would pay for the electric cars and charging stations.
Lyft has contributed $45 million of the $47 million raised by the Yes on 30 campaign.
Newsom’s move enraged environmental groups and other supporters. They note that although Lyft would benefit, the measure was written before the company was ever approached and asked for funding.
“The opposition has spent a lot of time trying to confuse people and is infusing the conversation with things that aren’t true,” said Mary Creasman, CEO Of California Environmental Voters, an environmental group based in Oakland.
The measure was born in 2020 when Stuart Cohen, a longtime Oakland transportation advocate, drew it up with Denny Zane, executive director of Move LA, another transportation group. They enlisted Nick Josefowitz, a former BART board member and chief policy officer at SPUR – the San Francisco Bay Area Planning and Urban Research Association – and others. The group held seven zoom meetings in 2020 and 2021 with leaders from environmental, labor and transportation groups, Cohen said.
“Lyft had absolutely nothing to do with the creation of this measure,” Cohen said. “It was 99% baked before they even came into the picture.”
By the fall of 2021, the organizers were unable to raise enough money to qualify the measure for the ballot. They called hundreds of companies, unions and wealthy donors without luck. Josefowitz, whose wife, Tali Rapaport, is a former vice president of Lyft, contacted the CEO of Lyft, Logan Green, and he agreed to bankroll the measure.
“Not a single dollar of Proposition 30 is earmarked for Lyft or the ride-sharing industry as a whole,” Green wrote in a recent blog post. “Ride-sharing drivers will be eligible just like ALL Californians, but they won’t receive any type of priority or preference.”
A poll released Oct. 4 from the UC Berkeley Institute for Governmental Studies found the measure narrowly leading 49% to 37% with 14% undecided. Two weeks before, it had 55% support in the same poll.
Meanwhile, some of California’s richest people have been making major donations to the No on 30 campaign.
Among the $1 million donors are Reed Hastings, the CEO of Netflix; Michael Moritz, a partner at Sequoia Capital, a Menlo Park firm that invested early in Google, Apple and Cisco; Mark Heising, founder of Medley Partners, a San Francisco private investment firm and the chairman of the Environmental Defense Fund; and hedge fund manager William Fisher, son of Donald and Doris Fischer, who founded The Gap clothing chain, and his brother John Fisher, owner of the Oakland A’s.
Hastings, the Fisher family and Heising are also major donors to Newsom.
Some political observers say Newsom may be opposing the measure as a favor to his donors. Others say he may be genuinely worried about rich people fleeing the state. Others say if he runs for president, he wants to be able to say he didn’t raise taxes.
“It wouldn’t surprise me if it was some amount of each of them,” said Eric Schickler, a political science professor at UC Berkeley.
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