Newsom Vetoes Tax Credit For Low-Income Residents Living Car-Free

By Madison Hirneisen | The Center Square, The Center Square California

October 2, 2022

(The Center Square) – A bill that would have enacted a tax credit for low-income families who do not own vehicles was vetoed by Gov. Gavin Newsom this week due to fiscal concerns.

Newsom vetoed Senate Bill 457 this week, a measure that would have offered a $1,000 tax credit to certain low-income taxpayers without a registered vehicle. The bill, which was significantly amended before reaching the governor, would have taken effect in January 2023 and applied to couples making $60,000 or less that file jointly and individuals who make $40,000 or less.

In a veto message Wednesday, Newsom raised concern about the cost of the bill that is not “accounted for in the budget.” He repeated a familiar sentiment written in several other veto messages this year – “With our state facing lower-than-expected revenues over the first few months of this fiscal year, it is important to remain disciplined when it comes to spending, particularly spending that is ongoing.”

Supporters of the bill said they were disappointed with the veto and questioned the state’s ease in spending to provide incentives for zero-emission vehicles. With transportation accounting for a large portion of the state’s greenhouse gas emissions inventory, advocates say incentives to help people transition to car-free life are needed to slash emissions.

“If our goal is to fight climate change, it can’t just be to give people money to buy electric cars – we also have to get people to stop driving so much in general,” Michael Schneider, founder of Streets for All, told The Center Square Thursday. “It remains puzzling to me why we are willing to give thousands so easily to incentivize people to buy an electric car, but we’re not willing to spend the same or even less money to encourage people to not use a car at all.”

A fiscal analysis initially estimated the bill would cost $900 million in its first year of implementation and $950 million in the second year. However, updated scrutiny from the Franchise Tax Board shared with Streets for All shows that the first year of implementation would cost $16 million, followed by $900 million in the second year and $950 million in the third year.

Michael said he doesn’t know if the updated figure would have made a “material difference” in gaining the governor’s signature on the measure but said the situation is “frustrating.”

In his veto message, Newsom wrote that he supports “approaches to incentivize a transition from vehicles to more sustainable transportation,” but contended that bills with a “significant fiscal impact” should be considered as part of the annual budget process.

Streets for All say they plan to support a similar measure next year. Schneider said he would “love to see something big, bold and ambitious that matches the governor’s rhetoric about climate change in next year’s budget.”

The focus of the work of The Center Square California is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.