California voters firmly rejected a measure that would have raised income tax on the state’s highest income residents to fund subsidies for the purchase of electric vehicles and charging stations.
The measure, dubbed Proposition 30, had financial backing from the ride-sharing company
Lyft
(ticker: LYFT), which wanted to provide drivers with an easier path to comply with a state mandate that will require 90% of all California ride-sharing miles to be provided by electric vehicles by 2030.
With close to 95% of the vote counted, Prop 30 was firmly defeated, by a 59% to 41% margin.
The measure was loudly opposed by California Gov. Gavin Newsom, who asserted that the measure was “fiscally irresponsible.” He asserted that the measure “puts the profits of a single corporation ahead of the entire state.”
To be clear, the measure didn’t mention Lyft, and would have benefited electric car buyers more generally. Nonetheless, the “No on 30” campaign described the measure as “Lyft’s tax grab.” Newsom, who is increasingly viewed as a potential presidential candidate, was easily elected to a second term as governor, beating Republican candidate Brian Dahle, 58% to 42%.
In a statement, Lyft expressed disappointment with the outcome. “The election results are an unfortunate setback for the climate movement,” the company said. “Climate change remains a generational issue that increasingly impacts every aspect of our lives … we remain committed to achieving our collective climate goals.”
Prop 30 was supported by some traditional Democrat constituencies, including the state’s Democratic Party, a range of environmental groups and EV advocates, the Union of Concerned Scientists, and the American Lung Association.
Opponents included some prominent figures in the technology sector, including
Netflix
(NFLX) CEO Reed Hastings and Sequoia Capital partner Michael Moritz, as well as many local chambers of commerce, and—marking a surprising ally for Newsom—the Howard Jarvis Taxpayers Association, a right-leaning antitax advocacy group.
Just two years ago, voters firmly supported Proposition 22—a measure supported by Lyft,
Uber
Technologies (
UBER
), and other gig economy companies—which was intended to spare the ride-sharing sector from a tough state law that would have required them to classify their drivers as employees, rather than contractors. (A court later declared Prop 22 to be unconstitutional, and the measure is still under litigation.)
The defeat of Prop 30 is a big win for the governor, who seems to be tacking to the political middle as he seeks to raise his national profile, a loss for EV companies like
Tesla
(TSLA), and a black eye for Lyft, which will have to find another way to help drivers buy EVs. It’s also good news for high-income Californians—residents who make $5 million a year would have paid an extra $52,500 a year in taxes had Prop 30 passed. At the level of $50 million a year, the extra tax would be $840,000.
The “Yes on 30” campaign blamed the loss on strong opposition from the state’s millionaires, and said in a statement that the proposal’s failure would lead to “more catastrophic wildfires, more toxic air pollution, more carbon emissions and yet another reason for young voters to give up hope that we can solve problems together.”
California voters also rejected two measures that would have expanded gambling in the state. Just 30% voted in favor of Proposition 26, which would have allowed sports wagering at casinos on Native American tribal land; and Proposition 27, which would have allowed online sports wagering in the state, lost in a landslide, with less than 17% of voters supporting the measure.
The clear rejection of Prop 27 is bad news for
DraftKings
(DKNG), whose shares slid 7.2% to $11.65 on Wednesday. Lyft stock is off 0.3% to $10.87, while Uber is 2.4% lower to $26.79, and Tesla is down 1.9%, to $187.75.
Write to Eric J. Savitz at eric.savitz@barrons.com