Over 50 groups call on Gov. Newsom to cut fossil fuel subsidies

On Friday, 51 groups sent a letter calling on Governor Gavin Newsom to cut tax subsidies for oil and gas while maintaining funding in the state budget for clean transportation and clean energy programs. The Governor’s January budget proposal would cut $6 billion in investments meant to stave off the worst impacts of the climate crisis. Rather than cutting these important programs that protect California’s air, climate, and public health, the Governor should instead cut subsidies and tax expenditures for oil and gas, which work against these critical goals.

Ending subsidies for the oil and gas industry is consistent with the state’s climate goals and could provide an important alternate source of revenue to continue to ensure California leads the way on climate. We can protect the funding needed to combat climate change and protect communities by cutting subsidies for major polluters. Read the letter to Gov. Newsom below:

Tell Gov. Newsom: End fossil fuel subsidies

Letter and Signers:

 

Dear Governor Newsom,

We applaud your recent leadership to take on Big Oil and rein in gas price gouging during the special session. Given your leading voice in aligning California policy with the State’s climate policies, we wanted to bring another matter to your attention.

In January you forecasted the State budget deficit at $22 billion. To help balance the budget you proposed several funding shifts and cuts, eliminating $6 billion in climate spending from last year’s $54 billion five year climate commitment. We understand the State must balance the budget, but core programs — which include investments needed to achieve the state’s climate goals — should be protected on an ongoing basis, not just in a budget surplus year.

The Department of Finance annually reports on tax expenditures. We’d like to request that your Administration review all current tax expenditures both specifically for the oil and gas industry and broader corporate tax expenditures that the oil and gas industry benefit from and utilize.  

Specifically, we request that the Administration estimate the value and eliminate the following significant tax benefits that are currently benefiting the oil and gas industry using North American Industry Classification System (NAICS) codes for the following corporation tax expenditures:

• Water’s Edge Election ($5 billion for all industries): Water’s Edge Election is a tax expenditure that allows multinational corporations to compute the income attributable to California on the basis of a water’s edge or domestic-only combined report, as opposed to a worldwide combined report. This allows a corporation to elect to compute its California tax by reference to only the income and factors of a limited number of entities. 
• Research and Development Credit ($3 billion for all industries): Corporations are allowed a credit for research expenditures.
• Accelerated Depreciation of Research and Experimental Costs ($90 million for all industries): Corporations are allowed the option to deduct research and experimental costs currently or amortized over a 60-month period.

We also request that the Administration further eliminate the following additional tax expenditures that currently benefit the oil and gas industry:

• Corporate tax: Percentage of Depletion of Mineral and Other Natural Resources ($10 million) 
• Corporate tax: Intangible Drilling Cost Expensing ($6 million)

Finally we request that the Administration restrict the following tax expenditure from benefitting the oil and gas industry:

• Sales tax: Exemption for Manufacturing and Research and Development Equipment ($495 million for all industries)

We can protect the funding needed to combat climate change and protect communities by cutting subsidies for major polluters. Your proposed budget makes cuts to critical investments for zero-emission-vehicle acceleration programs, sustainable transportation infrastructure, clean energy programs, and equitable building decarbonization, community resilience, among others. 

Ending subsidies for the oil and gas industry is consistent with the state’s climate goals and could provide an important alternate source of revenue to continue to ensure California leads the way in staving off the worst impacts of climate change. Ongoing savings associated with excluding the oil and gas industry from utilizing these tax expenditures (after calculating the benefit to Proposition 98) should be utilized to fund climate programs that were cut or delayed in the January Budget as part of the 2023-24 Budget Act. The statutory changes can be contained within a trailer bill to effectuate these changes.

Now more than ever, we must maintain our commitment to programs that safeguard communities from the impacts of climate change while building a clean energy economy. 

Sincerely,

Laura Deehan

State Director, Environment California

 

Arnold Sowell Jr.,

Executive Director, NextGen California

 

Bill Magavern

Policy Director, Coalition for Clean Air

 

Liza Tucker,

Consumer Advocate, Consumer Watchdog

 

Bill Allayaud

California Director of Government Affairs,

Environmental Working Group

 

Victoria Rome

California Government Affairs Director,

Natural Resources Defense Council

 

Amee Raval

Policy & Research Director, Asian Pacific 

Environmental Network

 

Ellie Cohen

CEO, The Climate Center

 

Brandon Dawson

Director, Sierra Club California

 

Robert M. Gould, MD

Board President, SF Bay Physicians for Social

Responsibility

 

Dominic Frongillo

Co-Founder and Executive Director,

Elected Officials to Protect America

 

Mike Young

Political & Organizing Director,

California Environmental Voters

 

Kevin D. Hamilton

Co-Executive Director, Central California Asthma

Collaborative

 

Sneha Ayyagari

Clean Energy Initiative Program Manager,

The Greenlining Institute

 

Cesar Aguirre

Oil and Gas Director, Central California

Environmental Justice Network

 

Katelyn Roedner Sutter

California State Director, Environmental Defense

Fund

 

Bahram Fazeli, Policy Director

Communities for a Better Environment

 

Jenn Engstrom

State Director, CALPIRG

 

Nicole Capretz

Founder and CEO, Climate Action Campaign

 

Daniel Barad

Western States Policy Manager, Union of

Concerned Scientists

 

Jenna Tatum

Executive Director, Building Electrification Institute

 

Ilonka Zlatar

Organizer, Oil and Gas Action Network

 

Bruce Hodge

Chair, Carbon Free Palo Alto & Carbon Free Silicon

Valley

 

Ector Olivares

Program Manager – Environmental Justice,

Catholic Charities of Stockton

 

Chirag G. Bhakta

California Director, Food & Water Watch

 

RL Miller

President, Climate Hawks Vote

 

William B. Wolpert

Architect, Green Building Architects

 

Leslie Alden

Executive Director, Drawdown Bay Area

 

Diane Bailey

Executive Director, Menlo Spark

 

Benjamin Eichert

Director, Let’s Green CA!

 

Nathan Taft

Senior Digital Campaigner, Stand.earth

 

Teresa Bui

Climate Policy Director, Pacific Environment

 

Kathleen Kramer, MD

Co-Founder, Project Green Home

 

Joyce Lane

Board President, SanDiego350

 

Shoshana Wechsler

Co-Coordinator, Sunflower Alliance

 

Eileen Mitro

Coordinator, Climate Action Mendocino

 

Cheryl Weiden

Steering Committee Member, 350 Silicon Valley

 

Annie Stuart

Steering Committee Member, 350 Petaluma

 

Pauline Seales

Organizer, Santa Cruz Climate Action Network

 

Michael J. Painter

Coordinator, Californians for Western

Wilderness

 

Andrew Truman Kim

Chair, Innovation & Sustainability PAC

 

Susan Morgan

Founder, Indivisible Marin

 

Iwalani Faulkner

Director, Equity Transit

 

Cynthia Kaufman

Coordinator, Pacifica Climate Committee

 

Veronica Wilson

California Organizer, Labor Network for

Sustainability

 

Sven Thesen

CEO, BeniSol, LLC

 

George Beeler

Principal Architect, AIM Associates

 

Gopal Shanker

President, Récolte Energy

 

Karen Cederholm

Climate Justice Policy Intern, Hammond Climate

Solutions Foundation

 

Bart Ziegler

President, Samuel Lawrence Foundation