California Proposition 70, Vote Requirement to Use Cap-and-Trade Revenue Amendment (June 2018) California Proposition 70: Vote Requirement to Use Cap-and- Trade Revenue Amendment
Election date June 5, 2018
Topic State and local government budgets, spending and finance and Energy
Status On the ballot
Type Origin Constitutional State amendment legislature
California Proposition 70, the Vote Requirement to Use Cap-and-Trade Revenue Amendment, is on the ballotin California as a legislatively referred constitutional amendment on June 5, 2018.[1] A "yes" vote supports this amendment to require a one-time two-thirds vote in each chamber of the state legislature in 2024 or thereafter to pass a spending plan for revenue from the state's cap-and-trade program for greenhouse gases.
A "no" vote opposes this amendment to require a one-time two-thirds vote in each legislative chamber in 2024 or thereafter to pass a spending plan for revenue from the state's cap-and-trade program. Overview What would Proposition 70 require? Proposition 70 would require a one-time two-thirds vote in each chamber of the California State Legislature to use revenue from the State Air Resources Board's auctioning or sale of greenhouse gas emissions allowances under the state's cap-and- trade program. To make sure no revenue is spent without the two-thirds vote, the measure would place all revenue from the cap-and-trade program in a Greenhouse Gas Reduction Reserve Fund beginning on January 1, 2024. The vote would take place anytime on or after January 1, 2024. Revenue would collect in this reserve fund until the one-time two-thirds vote occurred. If legislators failed to secure a two-thirds vote, revenue would keep collecting in the reserve fund and the state would be unable to spend the revenue. Between January 1, 2024, and the passage of the spending bill, the measure would also suspend a sales tax exemption for manufacturers, increasing tax revenue about $260 million per year. If legislators succeed at securing a two-thirds vote, revenue would begin to fill the non-reserve Greenhouse Gas Reduction Fund, which requires a simple majority vote to use funds from.[1][2][3] How is Proposition 70 tied to cap-and-trade negotiations in California? Rep. Chad Mayes (R-42) designed Proposition 70.[4] The amendment resulted from negotiations between Gov. Brown (D), legislative Democrats, and legislative Republicans over the future of the state’s cap-and-trade program. The negotiations resulted in three bills passing on July 17, 2017―an extension of cap-and-trade until 2030 (AB 398), new air pollution regulations (AB 617), and Proposition 70 (ACA 1). As Proposition 70 would require a two-thirds (66.6 percent) vote of the state legislature to spend revenue from the program, members of the minority party may be needed to pass a spending plan.[5][6][7] As of January 2018, Democrats were the majority party and controlled two-thirds of the seats in both the state Senate and state Assembly. Republicans were the minority party in both chambers. Text of measure Ballot title The ballot title is as follows:[8]
Requires Legislative Supermajority Vote Approving Use of Cap-and-trade “ Reserve Fund. Legislative Constitutional Amendment.[9] ” Ballot summary The ballot summary is as follows:[8]
∑ Beginning in 2024, cap-and-trade revenues will accumulate in a reserve “ fund. ∑ These cap-and-trade revenues cannot be used unless the Legislature authorizes such use by a two-thirds majority. ∑ On the effective date of any such authorization, the requirement that new revenues accumulate in this reserve fund will expire. ∑ Suspends certain tax exemptions, including for equipment used in manufacturing and research and development, beginning in 2024, until the effective date of any such authorization.[9] ” Fiscal impact statement The fiscal impact statement is as follows:[8]
∑ Potential temporary increase in state sales tax revenue from the sale of “ manufacturing and certain other equipment beginning in 2024. Amount could range from no increase to a few hundred million dollars annually. ∑ Possible change in the mix of cap-and-trade funding provided to state and local programs.[9] ” Constitutional changes See also: Article XX, California Constitution The measure would add a Section 24 to Article XX of the California Constitution. The following language would be added:[1] SEC. 24. (a) The Greenhouse Gas Reduction Reserve Fund is hereby created as a special fund in the State Treasury. (b) For the time period specified in subdivision (d) only, all moneys collected by the State Air Resources Board from the auction or sale of allowances pursuant to a market-based compliance mechanism established pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) shall be deposited in the Greenhouse Gas Reduction Reserve Fund. (c) Notwithstanding any other provision of this Constitution, moneys in the Greenhouse Gas Reduction Reserve Fund shall be available upon appropriation by the Legislature by rollcall vote entered in the journal, two-thirds of the membership of each house concurring, for the same purposes applicable on January 1, 2024, to the Greenhouse Gas Reduction Fund, created pursuant to Section 16428.8 of the Government Code. (d) Subdivision (b) shall apply beginning January 1, 2024, and until the effective date of legislation that contains an appropriation from the Greenhouse Gas Reduction Reserve Fund. After the effective date of that legislation, all new moneys collected pursuant to a market-based compliance mechanism shall be deposited in the Greenhouse Gas Reduction Fund, created pursuant to Section 16428.8 of the Government Code. (e) Section 6377.1 of the Revenue and Taxation Code shall not apply to sales that occur while the moneys specified in subdivision (b) are being deposited in the Greenhouse Gas Reduction Reserve Fund, but shall resume on the effective date of legislation identified in subdivision (d).[9] Support Supporters Officials
∑ Gov. Jerry Brown (D)[8] ∑ State Rep. Chad Mayes (R-42)[1]
Organizations
∑ California Chamber of Commerce[10] Arguments
∑ California Chamber of Commerce said, "The CalChamber Board voted to support this measure because ACA 1 will encourage bipartisan support for an expenditure plan and allow for a process to negotiate expenditures that furthers the goals of the Legislature as a whole. The pause on expenditures will allow time to evaluate the efficacy of programs that are being continuously funded."[10] Official arguments Gov. Jerry Brown (D), Rep. Chad Mayes (R-42), and Allan Zaremberg, president of California Chamber of Commerce, wrote an official argument in support of Proposition 70:[8] VOTE YES ON PROPOSITION 70 TO PROTECT TAXPAYERS AND OUR ECONOMY AND ENSURE CALIFORNIA CONTINUES ITS LEADERSHIP ON CLIMATE CHANGE. California’s ambitious plan to reduce statewide greenhouse gas emissions PASSED WITH SUPPORT FROM DEMOCRATIC AND REPUBLICAN LAWMAKERS and more than 150 organizations representing agriculture; environment; clean energy and technology; business; labor; firefighters; public health professionals; economists; and newspaper editorial boards from across the state. PROPOSITION 70 HELPS ENSURE THAT MONEY FOR PRIORITY PROGRAMS IS NOT DIVERTED BY POLITICIANS FOR PET PROJECTS. It is essential that future climate change revenues continue to reduce emissions and provide benefits to all Californians. Proposition 70 provides a strong safeguard against any effort to undermine this goal. It forces two-thirds of the legislature to come together in 2024 to evaluate if the money has been spent wisely and beneficially for the good of all Californians. PROPOSITION 70 SAFEGUARDS CALIFORNIA’S HISTORIC CLIMATE CHANGE PROGRAM WHICH PROTECTS OUR ENVIRONMENT, ENHANCES OUR ECONOMY, AND CREATES JOBS. The future of California’s signature climate change program depends on demonstrating that we can protect our environment while growing our economy. To accomplish this goal Proposition 70 helps ensure that the money to reduce greenhouse gases is spent in the wisest and most cost effective way; that protects taxpayers and our most polluted communities.
VOTE YES ON PROPOSITION 70 Proposition 70 is part of a historic bipartisan effort to achieve our climate goals, retain good paying jobs to sustain our growing economy, and protect air quality and public health. Opposition Opponents Officials
∑ Sen. Ben Allen (D-26)[8] ∑ Rep. Todd Gloria (D-78)[8]
Parties
∑ California Democratic Party[11]
Organizations
∑ Coalition for Clean Air[12]
Individuals
∑ Tom Steyer[8] Arguments Chris Chavez, Deputy Policy Director for the Coalition for Clean Air, said the amendment "could create major gridlock for California’s climate investment." He stated:[12]
Supposedly, ACA 1’s two-thirds vote requirement in 2024 is to ensure “ that cap and trade allocations maintain support from the state Legislature. We agree that it makes sense for the program’s allocations to be reviewed, but the Legislature should do that every year through the budget process, and there’s no valid reason to set up an anti- democratic two-thirds hurdle. ... A two-thirds vote gives polluters more leverage in how cap-and-trade funding is spent after 2024. The fact is, ACA 1 itself was a part of a deal to get a two-thirds vote for the cap-and-trade extension. When a two- thirds vote was required to approve California’s budget, legislative hostage-taking, gimmicks and pork barrel spending were part and parcel of the process.[9] ”
Official arguments Sen. Ben Allen (D-26), Rep. Todd Gloria, and Helen L. Hutchinson, president of the League of Women Voters of California, wrote the official argument against Proposition 70 found in the state's voter guide: NO ON PROPOSITION 70 Proposition 70 grew out of an oil industry-backed effort to derail the state’s premiere program to curb harmful air pollution. According to the Los Angeles Times, the industry spent millions of dollars lobbying to water down California’s commitment to clean air policies that reduce our dependence on high-polluting fossil fuels. Proposition 70 will increase legislative gridlock, undermine our clean energy progress, and empower special interests who are out of step with the majority of Californians. It doesn’t deserve your support. CLEAN AIR AND ENERGY POLICIES ARE WORKING A key component of California’s clean air strategy is a program called Cap and Trade that requires polluters to reduce their emissions or pay into a fund. This fund is used to increase energy efficiency in homes, businesses and schools, provide consumer rebates that make electric and hybrid cars more affordable, increase public transit, clean up dirty, heavy-duty trucks that pollute neighborhoods, and other successful anti-pollution programs. A RECIPE FOR GRIDLOCK By requiring a 2/3 supermajority vote of the legislature to allocate the funds paid by polluters, Proposition 70 would change this effective system and empower a small minority of politicians to divert the funds away from environmental priorities and prevent them from being spent to reduce pollution and provide needed transportation, housing and energy services to our communities. Californians will remember the painful deal-making to pass a state budget when that also required a 2/3 vote. Many months passed without a budget, and the deals became more desperate and more compromised by special interests as time passed. The voters put an end to that dysfunction back in 2010 when they changed the vote required for a budget to majority. We shouldn’t return to that broken system. LACK OF TRANSPARENCY Proposition 70 was the result of a backroom deal. Normally, it takes about nine months for a bill to pass the legislature. Measures typically have several hearings with the details studied and discussed. In contrast, Prop. 70 passed in only four days, without any hearing and without any opportunity for public comment. If it were such a great idea, why was it rushed through in secrecy? WHO DO YOU TRUST? The oil companies and a small group of politicians support efforts like Proposition 70 that weaken our state’s clean energy policies. Opposing Proposition 70 are good government groups like the League of Women Voters of California, and the state’s most respected environmental and social justice organizations including the California League of Conservation Voters, Natural Resources Defense Council, Coalition for Clean Air and California Environmental Justice Alliance. The Sierra Club California says the law behind this ballot measure would “delay urgent expenditures for climate, air quality, and other identified statewide and local priorities.” We urge you to vote No on Proposition 70 because it’s bad for the environment, bad for our economy, bad for good government, and could undo years of progress toward a cleaner future. Campaign finance See also: Campaign finance requirements for California ballot measures Total campaign contributions[13] as of March 21, 2018[14]
$0.00 Support:
$0.00 Opposition: As of March 21, 2018, there was one ballot measure committee—a PAC that receives and spends funds on ballot propositions—registered in support of Proposition 70. The committee was Assemblyman Chad Mayes Ballot Measure Committee to Support ACA 1/Proposition 70, which had not yet raised or expended funds.[15] As of March 21, 2018, there were no ballot measure committees registered in opposition to Proposition 70.[15] Reporting dates In California, ballot measure committees file a total of four campaign finance reports in 2018. The filing dates for reports are as follows:[16]
[hide]Campaign finance reporting dates for June 2018 ballot
Date Report Period
1/31/2018 Annual Report for 2017 1/01/2017 - 12/31/2017
4/26/2018 Report #1 1/01/2018 - 4/21/2018
5/24/2018 Report #2 4/22/2018 - 5/19/2018
7/31/2018 Report #3 5/20/2018 - 6/30/2018
1/31/2019 Annual Report for 2018 1/01/2018 - 12/31/2018 Media editorials Support Ballotpedia did not find any media editorial boards supporting Proposition 70. If you are aware of an editorial, please email it to [email protected]. Opposition
∑ The Sacramento Bee said, "No. In the last-minute deal-making that extended California’s landmark cap-and-trade law regulating greenhouse gas pollution, Brown gave Republicans this gift in exchange for their critical votes. ... But if Californians want to change the way cap-and-trade money is spent, they have an easier fix: Elect Republicans and put them in control of the Legislature. This measure is an attempted end run around a much-needed public works project that a lot of Californians want and that the majority of voters approved, at the behest, by the way, of a Republican governor."[17] Background Development of cap-and-trade in California AB 32 In 2006, the state government enacted the California Global Warming Solutions Act of 2006, also known as Assembly Bill 32 (AB 32). The act required the State Air Resources Board (SARB) to monitor and regulate the emission of greenhouse gases in California. SARB was instructed to determine what the greenhouse gas emission output was in 1990, and then adopt rules and regulations to decrease the state's output to 1990-levels by 2020.[18] Rep. Fran Pavley (D-27) introduced AB 32 into the California State Legislature on December 6, 2004. The bill remained in the committee process until August 30, 2006. The California Senate approved the bill 23-14. The California House of Representatives approved the bill 47-32. Gov. Arnold Schwarzenegger (R) signed AB 32 on September 27, 2006.[18] SARB voted 9-1 to adopt a cap-and-trade program as a method for meeting the requirements of AB 32 in December 2010.[19] Mary Nichols, chairperson of the board, said, "This program is the capstone of our climate policy, and will accelerate California’s progress toward a clean energy economy." John Telles, the board member who voted against cap-and-trade, stated, "This is a regressive tax on the most economically disadvantaged communities." [20] The program was implemented in late 2012.[21] As designed in 2012, the program caps greenhouse gas emissions at a specific amount each year, and the cap decreases about 2 or 3 percent annually until reaching 1990 emission levels. SARB determines the number of emission allowances to provide for free, auction, or sell to industrial businesses that emit 25,000 metric tons of carbon dioxide, a type of greenhouse gas, each annual quarter. In 2012, each allowance permitted the emission of one ton of carbon dioxide. As the cap decreases over time, the number of emissions allowances also decreases. At the first auction, held on November 14, 2012, all 23.1 million allowances for 2012 emissions were sold. Businesses that purchased more allowances than were necessary are allowed to sell allowances to businesses that purchased too few allowances. The November 2012 auction brought in $289 million, which was divided between investor-owned utilities and the Greenhouse Gas Reduction Fund.[21][22][23] Proposition 23 In March 2010, Rep. Dan Logue (R-3) and Ted Costa, president of People's Advocate, launched an initiative campaign to suspend AB 32 until the state unemployment rate dropped to 5.5 percent or less for four consecutive quarters.[24] Supporters collected the required 433,971 signatures, and the initiative was certified as Proposition 23 for the election on November 2, 2010. Voters rejected the proposition 62 percent to 38 percent.[25] The campaign in support of Proposition 23, named Yes on 23, received $10.7 million from contributors, including petroleum businesses Valero and Tesoro. Valero contributed $5.1 million, and Tesoro contributed $2.2 million. Opponents organized as Californians for Clean Energy and Jobs, and received $25.3 million to defeat Proposition 23. Thomas Steyer was the largest contributor to the campaign, donating $5 million.[26] Bills related to extending cap-and-trade in California AB 398 Assembly Bill 398 (AB 398) extended SARB's power to regulate greenhouse gas emissions beyond December 31, 2020, to December 31, 2030.[27] SARB was instructed to decrease the state's emissions output to 40 percent of 1990-levels by 2030.[28] Through negotiations between Gov. Brown, Democrats, and Republicans, AB 398 was also designed to repeal the state's fire fee and extend the manufacturer's sales tax exemption.[29] AB 398 suspended the fire prevention fee until January 1, 2031. As of 2017, about 800,000 state residents lived an area subject to the annual $152.33 fee, although 98 percent of them paid $117.33 due to a $35 discount.[30] The fee program was designed to spend revenue on grants to fire safe councils, tree removal and chipping projects, other fire prevention activities, and administration.[31] AB 398 also extended the manufacturer's partial sales and use tax exemption, which was set to expire on July 1, 2022, to July 1, 2030. That tax exemption was also given to agricultural businesses and utilities under AB 398.[32] AB 398 needed to receive a two-thirds vote in each chamber of the state legislature to pass. Both chambers voted on July 17, 2017. The California Senate voted 28-12 to pass the bill. At least 27 senators needed to approve the bill. Sen. Tom Berryhill (R-8) joined the chamber's 27 Democrats in voting yes. The California State Assembly voted 55-22, with two members not voting, to pass the bill. Democrats held 54 seats in the state Assembly. Seven Republicans joined 48 Democrats to pass the bill. Three Democrats joined 18 Republicans to vote against the bill.[27] AB 617 Assembly Bill 617 (AB 617) was designed to authorize local air districts to require oil refineries and other facilities to replace equipment with the best available retrofit control technology (BARCT) no later than December 31, 2023.[33][34] SARB was tasked with maintaining a statewide clearinghouse that identifies BARCT and related technologies to control toxic air contaminants. AB 617 increased penalties on air pollution law violations from non-vehicular sources from $1,000 per day to $5,000 per day and tacked this amount to changes in the California Consumer Price Index. The bill also tasked SARB with identifying communities with high cumulative exposure burdens to toxic air contaminants.[35] Impact of party control of state government See also: Party control of California state government Proposition 70 would require a one-time two-thirds vote in each chamber of the state legislature in 2024 or thereafter to pass a spending plan for revenue from the state's cap-and-trade program for greenhouse gases. As of 2018, Democrats control two-thirds of the seats in both chambers of the state legislature, along with the governor's office. As the spending legislation would be a statute, the governor would also need to sign off on the plan. Mayes v. Padilla
Lawsuit overview
Issue: Ballot language; whether ballot language written by state attorney general is false, misleading, and likely to cause prejudice against Proposition 70
Court: Superior Court of Sacramento County, California
Ruling: Ruled in favor of the plaintiff, requiring the attorney general to change the ballot title.
Plaintiff(s): Rep. Chad Mayes (R- Defendant(s): Secretary of State 42) Alex Padilla (D)
Plaintiff argument: Attorney General Xavier Becerra's (D) ballot language for Proposition 70 "is false, misleading, and likely to cause Defendant argument: prejudice against Proposition 70" As of March 8, 2018, the offices of because (1) the measure does not the secretary of state and attorney limit the legislature's authority, but general had not commented on the requires a one-time supermajority lawsuit. vote, and (2) the measure does not limit the legislature from using revenue to reduce greenhouse gas emissions. Source: Superior Court of Sacramento County On March 5, 2018, Rep. Chad Mayes (R-42), who was the legislative author of Proposition 70, sued Secretary of State Alex Padilla (D) over the ballot language for the proposition found in the voter pamphlet. Attorney General Xavier Becerra (D) wrote the ballot language for Proposition 70. The language that was proposed stated:[37]
LIMITS LEGISLATURE’S AUTHORITY TO USE CAP-AND- “ TRADE REVENUES TO REDUCE POLLUTION. LEGISLATIVE CONSTITUTIONAL AMENDMENT.
∑ Beginning in 2024, cap-and-trade revenues will accumulate in a special fund.
∑ These cap-and-trade revenues cannot be used unless the Legislature authorizes such use by a two-thirds majority.
∑ On the effective date of any such authorization, the requirement that new revenues accumulate in this special fund will expire.
∑ Suspends certain tax exemptions, including for equipment used in manufacturing and research and development, beginning in 2024, until the effective date of any such authorization.[9] ” Rep. Mayes said the language “is false, misleading, and likely to cause prejudice against Proposition 70." He said that the title, in particular, would mislead voters. The offices of Secretary of State Alex Padilla (D) and Attorney General Xavier Becerra (D) did not release statements in response to the litigation.[38] Mayes made two arguments in his legal complaint: 1. "... the title and summary mischaracterize [Proposition 70] as placing a “limit” on the Legislature’s authority to use auction revenue to reduce pollution. In fact, Proposition 70 simply requires a higher vote threshold (two-thirds instead of a majority) for a one-time appropriation in 2024." 2. "perhaps most problematic, the title is misleading because it implies Proposition 70 limits or prohibits the Legislature from “use[ing]” the auction revenue to reduce pollution or greenhouse gas emissions, when in fact the exact opposite is true." Rep. Mayes asked the court to strike the attorney general’s ballot language and consider adding the following italized ballot language to the voter pamphlet: REQUIRES THE LEGISLATURE TO APPROVE A “ GREENHOUSE GAS REDUCTION RESERVE FUND SPENDING PLAN BY A SUPERMAJORITY VOTE IN 2024. LEGISLATIVE CONSTITUTIONAL AMENDMENT.
∑ Beginning in 2024, money from the state’s market- based compliance mechanism will accumulate in a special reserve fund.
∑ These moneys will be held in the reserve fund until a two-thirds majority of the legislature authorizes a spending plan.
∑ On the effective date of any such authorization, the requirement that new revenues accumulate in this special fund will expire.
∑ Suspends certain tax exemptions, including for equipment used in manufacturing and research and development, beginning in 2024, until the effective date of any such authorization.[9] ” On March 12, 2018, Judge Allen Sumner ruled in favor of Rep. Mayes, ordering Attorney General Becerra to change the ballot title to "Requires Legislative Supermajority Vote Approving Use of Cap-and-Trade Reserve Fund."[39] Becerra agreed to change the ballot title. Rep. Mayes responded, "I'm glad that the Attorney General agreed that Prop. 70 does not limit the Legislature’s authority to use revenues from the sale of greenhouse gas emission permits to reduce pollution, but instead requires a supermajority to approve a spending plan." According to The Desert Sun, Becerra's office did not comment.[40]