SACRAMENTO — The state Senate leader on Monday backed off an unpopular proposal for a so-called carbon tax on consumer fuels and instead wants to dedicate billions of dollars generated by California’s greenhouse gas reduction law to affordable housing, mass transit and high-speed rail.
Senate President Pro Tem Darrell Steinberg said his willingness to pivot from a higher tax on gasoline, propane and other consumer fuels was driven by the need to fund environmentally friendly infrastructure projects while helping low-income Californians with housing. The Sacramento Democrat also threw his support behind Gov. Jerry Brown’s budget proposal to help finance the $68 billion bullet train with money from the cap-and-trade fund that was established as part of the greenhouse gas law.
“I am a quick learner,” Steinberg said at a Capitol news conference surrounded by transit, housing and environmental advocates. “Unlike the last time, I am thrilled to stand with a broad coalition.”
Steinberg released his initial proposal in February. It was quickly trounced as a direct hit to Californians even though the current cap-and-trade revenue system is expected to expand next year in a way that could raise the price of gasoline and other fuels. Steinberg said that could produce volatility for consumers and proposed his flat tax on fuels as an alternative.
He is now proposing to use revenue from greenhouse gas emission fees paid by industry as a source of funding for affordable housing and mass transit projects. He also wants the money going toward environmental improvements that include adding bicycle lanes and water efficiency projects.
Steinberg was initially concerned about how Brown’s budget would use cap-and-trade revenue for the bullet train. But on Monday he said funding the beleaguered transit project fits nicely with the state’s effort to promote clean infrastructure.
“I think it’s visionary. I think it’s a major job-creator, and I think future generations will be glad that we withstood the controversy,” Steinberg said.
Jim Evans, a spokesman for Brown, said the governor’s office doesn’t comment on pending legislation but “looks forward to working with the Legislature on an overall cap-and-trade funding plan.”
The Brown administration wants to spend a total of $850 million on transportation, energy efficiency and water projects in the next budget year under provisions of California’s 2006 greenhouse gas emissions law, known as AB32. Within that, Brown wants to direct $250 million to the high-speed rail project from the cap-and-trade fund, which raises money from California industries in a sort of emissions marketplace that is designed to reduce air pollution.
Steinberg, however, said California is expected to receive a windfall of up to $5 billion a year. He would rather see the state adopt a long-term spending plan.
The cap-and-trade program currently applies only to industrial plants and allows companies with higher emissions of greenhouse gases to buy pollution credits from companies that have found a way to lower their emissions below a certain threshold.
But next year, consumers will start to see the impact as the program is extended to the producers of carbon-based consumer fuels, which will raise prices at the pump by an uncertain level.
Republicans were pleased to see Steinberg backing off an estimated 15-cents-a-gallon carbon tax on fuel starting next year. They said they look forward to discussing California’s long-term infrastructure needs.
“Glad that the pro tem wisely backed away from a gas tax that would have unfairly punished lower-income working families,” said Peter DeMarco, a spokesman for Senate Republicans.
But DeMarco said the decision to “double down on high speed rail is a losing proposition.” The Legislative Analyst’s Office has said it is legally risky to link the bullet train to the cap-and-trade fund.
Under Steinberg’s latest plan, about 40 percent of the cap-and-trade fund would go toward affordable housing projects, 30 percent to transit, 20 percent to high-speed rail, and the remaining amount to other environmental and climate projects. He also wants a requirement that 25 percent of funding go toward disadvantaged communities.
“My larger concern then and now is the economic impact on low- and moderate-income people, and preserving and strengthening our essential climate goals,” Steinberg said.
Speaker-elect Toni Atkins, D-San Diego, said she looks forward to discussing the proposal with her colleagues in the Assembly as they formulate their budget priorities.
“Addressing climate change, finding a new source of funding for affordable housing, and encouraging mass transit are all key goals for our state,” Atkins said in a statement.