Facing a budget deficit of at least $45 billion, California Governor Gavin Newsom recently vetoed a bill that would provide subsidies for consumers who convert traditional cars into zero-emission vehicles.
In a veto letter to the legislature on June 14, Newsom stated: “Like the proponents of this bill, I am interested in accelerating the transition to ‘zero-emission vehicles’ in our state, but at a time when California is facing a budget deficit of up to $45 billion for the 2024-2025 fiscal year.” “Moreover, there is currently no identified or available funding in the state budget to support this new program.”
The State Senate bill SB301 was drafted by Senator Anthony Portantino, seeking to establish a “Zero-Emission Aftermarket Retrofit Program” that would provide up to $4,000 in subsidy per vehicle for retrofitting vehicles in California.
Qualified vehicles must have a range of at least 100 miles and must undergo testing by authorized personnel from the California Bureau of Automotive Repair.
The California Air Resources Board estimates that to develop and implement the program, the state government would need to spend $9.7 million annually to add 46 new positions. Legislative analysts estimate that the annual cost of funding allocated by the state and federal governments is $2 million.
SB301 is the first bill Newsom has vetoed in 2024, although he vetoed 50 bills in 2023 for similar reasons, citing the state budget deficit as the main rationale for his decisions.
Newsom emphasized that California already has over 1.8 million zero-emission vehicles and is making progress towards its environmental goals.
In 2020, Newsom issued an executive order requiring all passenger vehicles and heavy-duty trucks to achieve zero emissions by 2035 and 2045, respectively.
Newsom stated, “California is showing the world what is possible—promoting innovation and creating conditions for the prosperity of the industry.” “The state continues to invest billions of dollars in promoting ‘zero-emission vehicles’ and related infrastructure to achieve our climate and clean air goals.”
The bill’s sponsor, Portantino, stated that this legislation would help California meet its climate goals by incentivizing drivers to retrofit vehicles, noting that since the transportation sector is a major source of greenhouse gas emissions in California, implementing a plan to encourage vehicle retrofits is urgent.
Supporters believe that this bill will benefit low-income households in California, as it mandates that at least 25% of funds must be allocated to families with incomes not exceeding 400% of the federal poverty line, which is approximately $125,000 for a family of four.
Legislative analysis indicates that the cost of modifications (including replacement of pipelines, hoses, transmission systems, tanks, exhaust systems, and other parts) ranges from $8,000 to $65,000.
The time it takes to complete such modifications depends on the type of vehicle, with some models possibly requiring more space for battery installation.
An organization supporting the bill stated that it would be a win-win situation for California, the environment, and residents.
“We believe the SB301 bill is a positive step in alleviating the current pressure of electrification transformation,” the California Chamber of Commerce said in a legislative analysis report. “Moreover, the SB301 bill not only benefits the environment but also fosters manufacturing development and creates job opportunities in California.”
The bill received bipartisan support in the legislature, smoothly passing all committees and chambers of the California Legislature without any dissenting votes. Lawmakers could choose to override the governor’s veto, but this would require the support of over two-thirds of the votes in both the State Senate and Assembly.
In 2022, California Assemblymember Lori Wilson also introduced a similar bill, AB2350, but it was ultimately shelved in the State Senate Appropriations Committee.