Proposition 70: Voters Reject New Constraints on State's Climate Revenue Spending

Proposition 70 is about money raised by California’s cap-and-trade program to control climate emissions. Under that program, industries buy permits at a state auction allowing them to emit carbon dioxide and other greenhouse gases that contribute to global warming.

Prop 70 changes who gets a say in spending the money from those auctions.

UPDATE: Prop 70 went down to defeat on Election Day with more than 63 percent of voters casting “No” votes (92 percent of precincts reporting, statewide as of June 6).

What You Need to Know About Proposition 70

• Creates a new temporary “reserve” fund to collect revenue from the sale of cap-and-trade permits, starting in 2024.
• Requires a one-time, two-thirds vote of the legislature to release money from the special reserve.
• If the two-thirds “supermajority” isn’t achieved, the funds remain locked up until it is.
• An unrelated provision temporarily suspends a sales tax exemption for certain manufacturing equipment, until the reserve funds are released.

How Did It Get on the Ballot?

State lawmakers put Prop 70 on the ballot after extending the state’s cap-and-trade program to 2030 (original legislation expires in 2020).

Why Do People Support It?

Gov. Jerry Brown supports it, reportedly as part of a trade-off for Republican votes to extend cap-and-trade another ten years, to 2030.

The California Chamber of Commerce, which previously sued to block cap and trade, supports Prop 70, as the measure’s passage would give conservative lawmakers some measure of control over how cap-and-trade revenues are spent.

Why Do People Oppose It?

High-profile Democrats, such as billionaire environmentalist Tom Steyer, and most mainstream environmental groups are opposed, claiming it will create “gridlock” in deploying cap-and-trade revenues where they are needed. California abandoned its supermajority threshold to pass annual budgets because of recurring gridlock.

Who Gains — Who Loses?

Auctioning cap-and-trade permits raises billions of dollars for the state. Passage of Prop 70 could slow down the flow of money from the Greenhouse Gas Reduction Reserve Fund to programs aimed at reducing climate emissions. Some of these programs count on cap-and-trade money.

The state treasury would see a windfall of an estimated $260 million per year of additional revenue with suspension of the manufacturing sales tax exemption.