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LWV CA Ed Fund LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND
Nonpartisan Pros & Cons of

Proposition 7

AIR QUALITY IMPROVEMENT. TAX CREDITS.

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Initiative Statute
THE QUESTION

Should the state Air Resources Board, or local districts designated by that board, be authorized to award $218 million in state tax credits yearly, until January 2011, to encourage reduction in emissions of air pollutants either through (1) acquisition, conversion and retrofitting of vehicles and equipment or (2) research or business development of technologies to reduce air pollution?

THE SITUATION

In 1997, the federal Environmental Protection Agency (EPA) strengthened air pollution standards based on public health studies. These studies indicate that previous standards for ozone (smog) and fine particulates (soot) do not adequately protect against health problems. In California, air pollution is still above EPA standards.

THE PROPOSAL

Proposition 7 authorizes the California Air Resources Board (ARB):

  • to offer incentives in the form of tax credits:
  • to immediately reduce air-pollution emissions;
  • provide $218 million in tax credits each year, through 2010, with monies from the General Fund.

The ARB would establish priorities and criteria for the reduction of emissions on the basis of specific air quality attainment needs of each category within a district. Tax credits would be available for projects in specific percentages of the available funds that are awarded to each category. Projects eligible for tax credits include new vehicles, engines and equipment; retrofit of existing vehicles; conversion or use of agricultural waste; and research and development of technologies developed to reduce air pollution.

FISCAL EFFECT

The Air Quality Improvement tax credits would reduce personal and corporate income tax revenues; however, sales tax revenues could increase because of additional purchases of vehicles, equipment, or retrofit devices. The Legislative Analyst estimates a net loss of General Fund revenue in the tens of millions to over a hundred million dollars annually.

SUPPORTERS SAY

  • Tax credit incentives will encourage the private sector to reduce toxic emissions and help California comply with state and federal clean air acts.

  • Reducing air pollution will protect the health of children, the elderly, and people with lung disease or asthma.

OPPONENTS SAY

  • Proposition 7 gives tax breaks to multinational corporations that will receive a guaranteed market for their equipment.

  • Proposition 7 diverts funds from higher education, law enforcement, child protection and resource protection programs.

(Analysis prepared by the League of Women Voters of California Education Fund.)


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Last updated: August 30, 1998
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