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Proposition 70 - Supermajority Vote for Expenditure of “Cap-and-Trade” Funds

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Primary Elections, June 5, 2018


California has a number of programs designed to reduce greenhouse gas emissions.  One such program is referred to as “cap-and-trade.”  Under this program, which began in 2012, the state issues a limited number of permits to emit greenhouse gases.  Certain companies responsible for large amounts of greenhouse gases must obtain a permit for each ton of greenhouse gases they emit.  The state gives away about half of these permits for free and sells the other half at auctions.  Revenue collected from these auctions is deposited into a state fund called the Greenhouse Gas Reduction Fund (GGRF).

Proposition 70 would require that, beginning in 2024, these cap-and-trade auction revenues be deposited into a new reserve fund until the Legislature, by a two-thirds majority, authorizes the use of the revenues.  In addition, a current state sales tax exemption for manufacturing and certain other equipment would be suspended during this same period.

A YES vote on Proposition 70 means, beginning in 2024, revenue collected from the sale of state greenhouse gas emission permits would be deposited in a new special fund until the effective date of a bill that spends money from that fund, passed with a two-thirds vote of each house of the Legislature.

A NO vote on Proposition 70 means the Legislature could continue to authorize spending state revenue collected from the sale of greenhouse gas emission permits with a majority vote.

Fiscal Impact:

According to the Legislative Analyst Office (LAO), Proposition 70 would result in potential temporary increase in state tax revenue from the sale of manufacturing and other certain other equipment beginning in 2024.  This amount could range from no increase to a few hundred million dollars annually.  In addition, LAO states that Proposition 70 could result in possible change in the mix of cap-and-trade funding provided to state and local programs.

CCC Position:

No position.

Reflections on Church Teaching:

"The natural environment is a collective good, the patrimony of all humanity and the responsibility of everyone.  If we make something our own, it is only to administer it for the good of all. If we do not, we burden our consciences with the weight of having denied the existence of others."  - Pope Francis, Encyclical Letter Laudato Si : On Care for our Common Home (May 2015).

"It is the duty of citizens to contribute along with the civil authorities to the good of society in a spirit of truth, justice, solidarity, and freedom.  The love and service of one's country follow from the duty of gratitude and belong to the order of charity. Submission to legitimate authorities and service of the common good require citizens to fulfill their roles in the life of the political community.  Submission to authority and co-responsibility for the common good make it morally obligatory to pay taxes, to exercise the right to vote, and to defend one's country."  Catechism of the Catholic Church, nos. 2239-2240.

"In a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing."  - Mater et Magistra, Encyclical of Pope John XXIII on Christianity and Social Progress, May 15, 1961 (132).