California Referendum Passes: $500 Million a Year for Efficiency, Clean Energy Projects at Schools

Green business advocates dismayed over the defeat of California’s GMO labeling referendum can take heart in the easy passage of another state measure – one that will provide about $500 million a year for energy efficiency and clean energy projects at public buildings and schools.

Proposition 39 (Clean Energy Jobs Act) closes a legislative loophole that rewarded companies for creating jobs outside of California. The new law requires out-of-state businesses to calculate their California income tax liability based on the percentage of their sales in California.

Previously, an out-of-state business that conducted business in California, could reduce their California income taxes by not locating facilities or employees within the state.

Supporters expect the new law to bring more than $1 billion a year back into the state. It will be used to reduce the general budget deficit, help fund schools, and invest in clean energy and energy efficiency projects at schools.

It passed 60-40. 

For the first five years, half the money will fund energy efficiency and clean energy projects at schools, creating 40,000 green jobs in the state. The other half will go to the state budget and education.  

Tom Steyer, former chairman of San Francisco-based hedge fund, Farallon Capital Management, and a fervent environmental advocate, spent $32 million of his own money to advocate for the proposition – basically the sole backer of the referendum. It was opposed by Philip Morris, Kimberly-Clark, General Motors, Chrysler, International Paper, Procter & Gamble and others.

Prop 39 campaign co-chair, Senator Kevin De Leon (D-Los Angeles) will hold hearings starting in January to determine how the clean energy funds will be spent. He plans to include  representatives from finance, commercial real estate, construction and labor, and California school districts, in the discussions.

Similar laws have been passed in New Jersey, Illinois, and Texas. New Jersey Republican Governor Chris Christie said, "moving to a single sales factor removes a barrier to firms seeking to locate and grow their business and jobs in New Jersey, while also helping retain companies with headquarters in the state."

Update August 2013:

A bill passed that implements Prop 39 (S73) – it allocates more than $460 million for energy projects at K-12 schools and community colleges for fiscal year 2013-14. Schools will be chosen based on average daily attendance and more money will go to schools where a higher percentage of students receive free or reduced-price lunches. School districts will apply for the projects.

Learn more about Clean Energy Jobs Act:

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