A Smaller Loss for Taxpayers on Electric Car Subsidies

It’s a sad indictment of California’s political class, but often the Legislature’s top achievements are the things it didn’t get around to doing. Up until the final days of the legislation session, this year’s chief accomplishment looked like it would be the failure of a scheme to spend billions on clean-car incentives. But it looks like it will be offset by a last-minute deal made between Gov. Jerry Brown and the Democrats.

Late in the session, the governor and the Democrat leaders reached an agreement on spending cap-and-trade revenue. The arrangement created Assembly Bill 134 and Senate Bill 119, identical legislation that appropriates $140 million for electric car rebates.

There’s an interesting twist to the rebates, though. They will be good only for cars made by companies that the state labor secretary has certified “as fair and responsible in the treatment of their workers.” That’s a shot at Tesla fired on behalf of unions, which have been unsuccessful in organizing the electric car maker.

Initially, the plan was to spend $3 billion on electric cars. Assembly Bill 1184 would have provided electric plug-in vehicle and plug-in hybrid buyers with rebates that could reach up to $30,000 to $40,000, for the most expensive cars, such as a Tesla Model S P90D, according to figures calculated by Sen. Andy Vidak, a Republican from Hanford who voted against the bill in committee. But the funding was removed, leaving the bill a directive that requires the California Air Resources Board to “to submit to the Legislature a report on the operations of its vehicle incentive programs containing specified information.”

Consequently, there’s no win for taxpayers here, just smaller loss.

Though stripped of funding, AB 1184, which, as some have noted, could have been called the Elon Musk Bailout Act of 2017 in its original rendering, was not made fully harmless. It still charges CARB to report to Sacramento:

The funding levels necessary to support continuous, year-round operation of each of its zero-emission vehicle and near-zero emission vehicle incentive programs.

Changes to the zero-emission vehicle incentive programs that are necessary to increase market penetration of zero-emission vehicles.

So lawmakers’ urge to steer Californians to the class of automobiles that they have anointed as the political vehicle of choice remains. Sacramento will continue to prod the state toward the governor’s goal to put 1.5 million clean-energy vehicles on California’s roads by 2025. Withdrawing funds from AB 1184 was but a small hitch in the plan. The coercion will surely intensify next year and a larger pool of money will be sought and acquired. The legislators will never reach their goal of beating climate change, but they will get to feel good about themselves at other people’s expense.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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