Over 50 groups call on Gov. Newsom to cut fossil fuel subsidies
Environmental and consumer groups call on Governor Newsom to cut fossil fuel subsidies instead of clean transportation and clean energy funding in the state budget.
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:
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.
State Director, Environment California
Arnold Sowell Jr.,
Executive Director, NextGen California
Policy Director, Coalition for Clean Air
Consumer Advocate, Consumer Watchdog
California Director of Government Affairs,
Environmental Working Group
California Government Affairs Director,
Natural Resources Defense Council
Policy & Research Director, Asian Pacific
CEO, The Climate Center
Director, Sierra Club California
Robert M. Gould, MD
Board President, SF Bay Physicians for Social
Co-Founder and Executive Director,
Elected Officials to Protect America
Political & Organizing Director,
California Environmental Voters
Kevin D. Hamilton
Co-Executive Director, Central California Asthma
Clean Energy Initiative Program Manager,
The Greenlining Institute
Oil and Gas Director, Central California
Environmental Justice Network
Katelyn Roedner Sutter
California State Director, Environmental Defense
Bahram Fazeli, Policy Director
Communities for a Better Environment
State Director, CALPIRG
Founder and CEO, Climate Action Campaign
Western States Policy Manager, Union of
Executive Director, Building Electrification Institute
Organizer, Oil and Gas Action Network
Chair, Carbon Free Palo Alto & Carbon Free Silicon
Program Manager – Environmental Justice,
Catholic Charities of Stockton
Chirag G. Bhakta
California Director, Food & Water Watch
President, Climate Hawks Vote
William B. Wolpert
Architect, Green Building Architects
Executive Director, Drawdown Bay Area
Executive Director, Menlo Spark
Director, Let’s Green CA!
Senior Digital Campaigner, Stand.earth
Climate Policy Director, Pacific Environment
Kathleen Kramer, MD
Co-Founder, Project Green Home
Board President, SanDiego350
Co-Coordinator, Sunflower Alliance
Coordinator, Climate Action Mendocino
Steering Committee Member, 350 Silicon Valley
Steering Committee Member, 350 Petaluma
Organizer, Santa Cruz Climate Action Network
Michael J. Painter
Coordinator, Californians for Western
Andrew Truman Kim
Chair, Innovation & Sustainability PAC
Founder, Indivisible Marin
Director, Equity Transit
Coordinator, Pacifica Climate Committee
California Organizer, Labor Network for
CEO, BeniSol, LLC
Principal Architect, AIM Associates
President, Récolte Energy
Climate Justice Policy Intern, Hammond Climate
President, Samuel Lawrence Foundation
Clean Energy Advocate, Environment California
Steven leads Environment California’s campaigns to increase clean, renewable energy throughout the Golden State, spearheading efforts to transition away from dangerous fossil fuels and address climate change. Steven lives in Los Angeles where he enjoys spending time outdoors, watching his favorite L.A. sports teams, and playing the trombone.
State Director, Environment California
Laura directs Environment California's work to tackle global warming, protect the ocean and fight for clean air, clean water, open spaces and a livable planet. Laura stepped into the State Director role in January, 2021 and has been on staff for over twenty years. She has led campaigns to make sure California goes big on offshore wind and to get lead out of school drinking water. As the Environment California Field Director, she worked to get California to go solar, ban single use plastic grocery bags and get on track for 100% clean energy. Laura lives with her family in Richmond, California where she enjoys hiking, yoga and baking.