60+ lawmakers and climate advocacy groups call on Newsom to end fossil fuel tax breaks and subsidies as California grapples with budget deficit

Sacramento, Calif. — California lawmakers have added their voices to more than 60 climate and environmental justice organizations that delivered a letter to Governor Gavin Newsom today, calling on him to end tax breaks and subsidies for oil and gas companies. While the state faces an expected budget shortfall of up to $68 billion, much of which could impact the historic $51 billion climate budget, the letter’s signatories point to billions of dollars in potential budget savings that could come from eliminating these subsidies. The letter argues that companies like Chevron benefit particularly from a loophole enabling it to store assets in tax haven countries.

“We’re coming off the hottest year in recorded history — it is unconscionable that a climate leader like California continues to make billions of dollars available to fossil fuel corporations like Chevron every year. Facing a projected $68 billion budget deficit, we strongly urge Governor Newsom to eliminate all tax breaks and subsidies for Big Oil and instead invest those funds in life-saving climate solutions including clean electricity, sustainable agriculture, and more”, said Woody Hastings, the Phase Out Polluting Fuels Manager with The Climate Center.

The state is already moving away from fossil fuels, noted the letter’s signatories, and Governor Newsom has signaled strong support for holding the industry accountable for its obstructing climate progress and price gouging at the pump. California’s climate goals include carbon neutrality by 2045.

“Putting an end to fossil fuel subsidies isn’t merely a fiscal necessity — it’s a moral imperative. Governor Newsom has an opportunity to showcase his leadership priorities by ending subsidies for major polluters, particularly when our climate funding is at risk and this industry profits significantly at our expense. We need to refocus on our well-being and the air and water we need for public health instead of enriching an industry that harms both.” said Laura Deehan, State Director of Environment California. 

Cutting the Water’s Edge Election, an expenditure that sanctions the use of offshore tax havens, would save the state approximately $4.3 billion. Chevron, the beneficiary of this tax loophole, used tax havens to hide $31 billion in profit, according to a 2015 Senate investigation. Wealthy oil and gas corporations have also benefited from the Research and Development Credit, which is largely distributed among companies with revenue of $1 billion or more. Eliminating this subsidy would save taxpayers approximately $3.1 billion. 

Per the letter’s recommendations, any savings incurred by the closure of these tax benefits and subsidies should be applied to climate programs in the 2024-2025 budget that would otherwise be cut. 

“California should not be forcing taxpayers to pay for extreme tax breaks to fossil fuel companies while they rake in record profits, especially not during our current budget deficit,” said Senator Josh Becker (D-Menlo Park). “We need to prioritize investments in clean energy and climate solutions that get us to net-zero, not provide handouts to the worst polluters.

“We recognize the state’s budget challenges, but Californians are dealing with their own financial hardships, due to high fossil fuel prices, extreme weather and climate disasters. Investing in climate programs that cut pollution while helping Californians move to cheaper and safer clean energy is one of the most important things we can do to put money back in people’s pockets while also improving our health and well-being,” said Senator Lena Gonzalez (D – Long Beach).  With looming cuts to the historic climate budget, California must promptly end fossil fuel subsidies. It makes no sense for Californians to subsidize polluters when vital climate programs are at risk.”

For more information, please contact Alexandra Nagy at [email protected].

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