VC hopes Prop 39 will cement CA as green leader
SACRAMENTO, Calif. (KGO) -- A controversial proposition on the November ballot is designed to bring in more money for California, but critics say it could backfire and cause the state to lose money and jobs.
Venture Capitalist Tom Steyer is trying to cement California's standing as the country's green leader by spearheading Proposition 39 on the November ballot.
But how he wants to pay for the clean energy effort is controversial -- take away what he calls a loophole allowing multi-state corporations to choose between two formulas when calculating their state taxes. It was part of a late-night deal in 2009 to entice Republicans to vote for a state budget. Since then, companies have chosen the formula that means less money for the state.
"It's crazy to do that and we can't afford to give away $1 billion a year to companies out of state," Steyer said.
So Detroit automakers, for example, have a smaller state tax bill -- fewer employees here but big sales of their products in California -- than companies based in the Golden State.
Some California companies like Genentech say that's not fair. In fact, the Bay Area biotech firm decided to open an office in Oregon to take advantage of the tax break.
Steyer says Prop 39 stops rewarding companies for creating jobs out of state. With that billion dollars a year, half of it will help retrofit public buildings and facilities for alternative energy for five years and help train a workforce to do those projects. The other half would go to the state budget to help schools.
"First of all, it closes a loophole that never should have been there in the first place," Steyer said. "Second of all, it brings over a $1 billion every single year, and third of all, it will create tens of thousands, up to 100,000 jobs."
But multi-state companies say changing their tax formula will actually cost California jobs.
"It will simply raise the cost of doing business in the state and that will hurt jobs," California Manufacturers and Technology Association spokesperson Dorothy Rothrock said.
But with no formal campaign launched yet to fight Prop 39, it'll be difficult to reach out to voters.
"It's very hard to understand what the complexities of corporation taxation and if you don't understand it, you probably should vote no," Rothrock said.
Steyer has put up $21 million dollars of his own money to get voters to approve Prop 39. Steyer admits he does invest in green tech companies, but insists Prop 39 will not boost his portfolio.
elections, economy, jobs, california budget crisis, politics, nannette miranda
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