Integrating California's Climate Change and Fiscal Goals

composite image of effects of climate change
February 3, 2016

Bacon Public Lectureship Winner, Karen Chapple, Professor of City and Regional Planning and IGS affiliated faculty, will present a lecture "Integrating California's Climate Change and Fiscal Goals: The Known, the Unknown, and the Possible" on February 24, 2016 from 12:00-1:00pm for the University of California Center, Sacramento.

Few would disagree that California’s fiscal structure is complex, inflexible, and inefficient. As a global leader in climate policy and sustainability planning, California needs to ensure that it generates tax revenue in a way that supports – or at least does not interfere with -- its climate goals. This paper examines the relationship between California’s fiscal structure and its greenhouse gas reduction targets for passenger vehicles. In theory, California’s imbalanced tax structure may contribute to inefficient land use patterns, thus increasing vehicle miles traveled. A review of the literature suggests that it is not clear exactly how taxes are changing behavior; adjusting the fiscal mix would would likely have minimal impacts on land development patterns. Further, California’s tax structure is notably progressive, and any shift away from reliance on the income tax risks making it less so. Many, if not most, Californians would not support a shift to property and sales taxes that sacrifices the poor for environmental goals, especially if the effectiveness of the new approach is uncertain. But both theory and evidence suggest some basic principles to guide future tax reform to be consistent with climate policy: Return more property tax to municipalities, share sales tax regionally, avoid penalizing new development, and most importantly, connect future taxes directly to environmental goals.