SACRAMENTO — Moments ago, Governor Newsom revealed key details of his May budget revision to be released next week, cementing his intentions to cut billions of dollars from programs designed to clean the air and reduce climate pollution. Despite a multibillion-dollar deficit, the governor is yet to respond to advocates’ calls to eliminate all tax breaks and subsidies for fossil fuel corporations in the state budget.
In response, Barry Vesser, Chief Operating Officer for The Climate Center, said:
“California’s ambitious climate goals mean little without investment to back them up. That Governor Newsom would derail efforts to give our kids clean air and a stable climate before eliminating tax breaks for companies like Chevron is sorely disappointing. In the final month of budget negotiations, we urge the legislature to end taxpayer-funded polluter handouts and fight for life-saving investments in clean transportation, equitable building decarbonization, and climate-smart agriculture. Balancing the budget is tricky, but this decision should be easy. Our children’s health and California’s reputation as a climate leader are at stake.”
Both the governor’s January budget proposal and the May revise wisely recommend eliminating the following subsidies that benefit oil and gas corporations, which would save the state roughly $22 million this year:
- Immediate Deduction for Intangible Drilling Costs, which allows oil and gas producers to deduct intangible costs such as survey work, ground clearing, drainage, and repairs.
- Percentage Depletion Rules for Fossil Fuels, which allows businesses to deduct a fixed percentage of gross income that is higher than the normal cost-depletion method when it comes to resource depletion of mineral and other natural resources.
- Enhanced Oil Recovery Costs Credit, which provides certain independent oil producers a nonrefundable credit equal to 5 percent of the qualified enhanced oil recovery costs for projects located in the state if the reference price of domestic crude oil falls above a specified threshold for the preceding year.
However, California makes hundreds of millions, if not billions, of dollars in tax breaks and subsidies available to fossil fuel corporations every year. That’s why The Climate Center and more than 70 other environmental organizations joined state lawmakers on a letter urging Governor Newsom to eliminate all state fossil fuel subsidies.
The letter outlines billions of dollars in potential budget savings and points out that companies like Chevron benefit particularly from a loophole enabling it to store assets in tax haven countries. Chevron is one the biggest lobbying spenders in the state, having already spent more than $3 million this year to obstruct climate policy.
To meet our climate goals — including brand new targets for nature-based climate solutions — California must invest more in proven, equitable climate solutions. In addition to eliminating fossil fuel subsidies to free up revenue, more than 160 organizations are calling on state leaders to put a bond on the November to fund climate resilience programs.
“Every day we wait to invest in climate solutions, the more expensive it becomes,” continued Vesser. “It is imperative that the legislature put a climate bond before voters this November to ensure we have stable investment in clean air, clean water, and protection from increasingly extreme climate disasters.”
The legislature now has until June 15 to vote on a final budget and June 27 to introduce a climate bond for the November election.
ENDS
Contact:
Ryan Schleeter, Communications Director, The Climate Center: ryan@theclimatecenter.org, (415) 342-2386
About The Climate Center:
The Climate Center is a climate and energy policy nonprofit working to rapidly reduce climate pollution at scale, starting in California. We are a think-tank, do-tank working to turn bold ideas into action for a climate-safe future. Our flagship Climate-Safe California campaign is a unique and comprehensive effort to make California the first state in the nation to reach carbon negative. www.theclimatecenter.org
