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It’s the day after the election and the results are (mostly) in. Since it’s Wednesday at dot.LA, we’re talking climate and energy in today’s newsletter, and so we’ve got to discuss Prop 30.
The basic idea behind Prop 30 was to tax the state’s wealthiest residents and use the money to help fund electric vehicle purchases, infrastructure and wildfire prevention. The 1.75% tax increase on individual incomes over $2 million would’ve generated an estimated $100 billion over the next 20 years. Much of the money would’ve been earmarked for low- and middle-income residents in danger of being left out of the new energy economy.
But Californians voted the measure down. The result marked a dramatic reversal in the state’s opinion: In July this year, polling indicated that nearly two thirds of residents favored the new tax. What happened?
Curiously, much of the opposition to the bill came from Democratic Governor Gavin Newsom’s office. At first glance, this stance appears at odds with the rest of Newsom’s policies. This is the same governor who backed the California Air Resources Board’s decision to ban all new gas car sales by 2035. This is also the same governor who has championed charging infrastructure and renewable energy.
The official line from the governor’s office has been that Prop 30 is a thinly-veiled handout to rideshare giant Lyft. There is certainly merit to this claim. Lyft very publicly backed the proposition and spent more than $45 million in advertising in an effort to sway voters. Since most Lyft drivers qualify as middle- or low-income residents, the money from Prop 30 would’ve functioned as a subsidy of sorts to Lyft, by helping its drivers afford new electric vehicles. The rideshare company likely saw the legislation as a way to get someone else to foot a bill they see on the horizon.
Of course, this is not the first time rideshare giants have shoved their money toward ballot box propositions in the state. Remember how Prop 22 would’ve forced Uber and Lyft to treat their workers as employees instead of independent contractors? As such, the proposition’s failure suggests that Californians may be growing tired of tech companies trying to tell them how to vote.
Viewed from another angle, Prop 30 didn’t give any money directly to Lyft or other rideshare services. Instead it gave the money to drivers in the form of subsidies for EV purchases. The subsidies weren’t restricted to rideshare employees or independent contractors, however. Instead, the money was for all middle- and low-income Californians. That’s a big difference: Uber had 209,000 drivers in California in 2020, while Lyft reported 305,000 drivers as of 2019. That’s roughly half a million rideshare drivers in the state. This represents less than 2% of the 29 million cars and light duty trucks on the road as of 2022. So while the money may have been a nice subsidy for Lyft, the overwhelming share of it would’ve gone to drivers who have never and will never work for a rideshare company.
Why then the governor’s office campaigned so vociferously against the measure must remain in the realm of speculation. But it would be easy to frame the move as a concession to the governor’s rich donors. If that concession is warranted or not is up for the voters to decide, but it may not be as clear cut as “taxing the rich = good.” Wealthy Californians already pay the highest taxes in the United States and opponents of Prop 30 have used that fact to argue that if the state continued to use ballot box props to enact tax increases, money and industry would simply leave the state and set up elsewhere.
Finally there’s the opportunity cost argument. Is this the best use of $100 billion? With so much money already flowing into the EV sector from both state and federal policies, it’s unclear how added benefit would come from further sweetening the pot.
Still, lower income residents are certainly at risk of being left out of the clean energy economy, so it would have been nice to see money specifically designated to rebalance that inequality. But the biggest obstacle to getting more EVs on the road right now is supply, not demand. Every EV manufacturer has long wait lists for vehicle orders–some spanning years. Prop 30 might’ve made these purchases easier for Californians who need the help, but that doesn’t do much good if there are no cars to buy. Of course, the prop would’ve provided financial assistance long into the future and given the scales of supply and demand time to balance. But people vote at a particular moment in time, and the people have spoken.
Email me at email@example.com and let me know what you think. Is this a brilliant political move from Newsom that lets him cater to his wealthiest donors while shirking blame onto Lyft? Or was prop 30 just another tech company handout that pilfered from the pockets of the state’s wealthy cash cows? -- David Shultz
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What We’re Reading...
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