California electric-car rebates caught up in politics as cash runs out


2017 Chevrolet Volt

2017 Chevrolet Volt

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California's electric-car rebate program has exhausted its funding, and allocating more money has proved somewhat difficult.

All applications since June 10 have been placed on a waiting list pending the outcome of state budget negotiations.

This isn't the first time the program—which provides rebates of $2,500 for new battery-electric cars and $1,500 for plug-in hybrids to most buyers—has run short of cash.

DON'T MISS: Rich Electric-Car Buyers In CA Face Mid-March Deadline For Rebates

But in this case, the electric-car incentive program's fate may be determined as much by politics as budget considerations, reports the Los Angeles Times.

A budget for the upcoming fiscal year—which begins July 1—approved by the California legislature last week includes no funding for electric-car incentives.

That's not due to lack of available funds.

2016 Nissan Leaf, Chevy Bolt EV at Drive Electric Week event, Los Angeles [photo: Zan Dubin Scott]

2016 Nissan Leaf, Chevy Bolt EV at Drive Electric Week event, Los Angeles [photo: Zan Dubin Scott]

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The incentive program is typically funded with the proceeds from auctions that are part of California's cap-and-trade program, which requires businesses to buy permits based on the amount of pollutants they generate.

The latest auction of permits yielded very little revenue, but the state had previously stockpiled $1.4 billion in the auction-proceed fund.

That includes revenue earned last year that was never spent, because lawmakers and Governor Jerry Brown couldn't agree on how to use it.

ALSO SEE: California car incentives may expand to more low-income buyers

Environmental advocates now believe Brown is withholding this money as an incentive for lawmakers to reach a deal this summer on extending the cap-and-trade program itself.

The Brown administration has not commented on plans to use the funds in this way, but the governor is seeking to extend the program past 2020.

Cap and trade has been one of California's highest-profile efforts to combat climate change, and provides funding for other state initiatives, including a high-speed rail line connecting San Francisco and Los Angeles.

2016 Fiat 500e

2016 Fiat 500e

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Yet the program's legality is being challenged in court by the California Chamber of Commerce.

The business group claims that, because the state relies so much on cap-and-trade revenue for funding different projects, the program functions as a tax and is therefore unconstitutional.

Lawmakers did not follow the proper procedure for approving a new tax when passing it, the chamber claims.

MORE: CA Electric-Car Incentive Update: Funds Run Out, Green Stickers Gone (Apr 2014)

At the same time, the continuing popularity of the electric-car incentive program has forced lawmakers to look for ways to make the most of limited funds.

Beginning in March, California introduced income caps for the rebates, but also increased the amounts for low-income applicants.

This did not affect a $5,000 credit for hydrogen fuel-cell vehicles, which is funded alongside the incentives for plug-in cars.

[hat tip: John C. Briggs and others]

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