CA: Senate Leader Calls for New Tax on Gas to Fund Transit

Feb. 21--Californians gassing up their cars would pay a carbon tax -- starting at 15 cents per gallon next year and rising to 43 cents per gallon in 2030 -- under a proposal made Thursday by Senate leader Darrell Steinberg, D-Sacramento.

Steinberg touted the plan as a better alternative to the rising gas prices that drivers would otherwise face under California's existing law to reduce greenhouse gas emissions. Under the landmark 2006 law, known as Assembly Bill 32, oil companies will have to buy carbon credits for all the fuel they sell starting next year. Experts expect that will lead to a rise in gas prices that could fluctuate unpredictably.

Steinberg said his plan would provide more stability. The senator could introduce the measure as early as today.

"We must reduce the amount of carbon we put into the air, and that will come with a price," Steinberg said while unveiling the proposal during a lunchtime speech at the Sacramento Press Club. "Nothing is free. A carbon tax is not free, and cap-and-trade is not free.

"Under either, applied to fuel, consumers will undoubtedly pay more at the pump. It may not be popular to say, but that's necessary. Higher prices discourage demand. If carbon pricing doesn't sting, at least a little bit, we won't change our habits."

But the lawmaker who helped write AB 32 said Steinberg's plan would weaken the law. "This proposal will say, 'OK fuel sector, you don't have to ... reduce your greenhouse gas emissions anymore," said state Sen. Fran Pavley, D-Agoura Hills. "It pokes a big hole in the whole policy of AB 32, of treating all the major polluters equally."

Steinberg's proposal calls for spending the taxes generated -- estimated at more than $3 billion in the first year -- to improve public transportation and give income-tax credits to California families making up to $75,000 a year. That would give about $600 back to the average qualifying household, Steinberg said. He said it also would strengthen AB 32 by phasing in new requirements through 2050.

Environmental groups that support AB 32 were critical of Steinberg's proposal, while the oil industry did not initially object.

"What the Senate leader's plan does is put a different option out there that is broader in nature, more transparent and flexible. And it achieves the same goals that AB 32 is trying to achieve, but it does it in a way that's less impactful to the consumer," said Catherine Reheis-Boyd, president of the Western States Petroleum Association.

But pricing gas so people feel the impact of pollution is exactly what's needed to change transportation habits and improve the environment, said Timothy O'Connor, an attorney with the Environmental Defense Fund. He said nearly 40 percent of greenhouse gasses in California come from vehicles.

"Dismantling or disrupting a world-class program that's working to cut pollution and replacing it with something where you can't guarantee those reductions in the communities that he's trying to protect doesn't seem like a very reasonable approach," O'Connor said after Steinberg's speech.

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