Politics

State senator moves to tax oil companies for education

Wednesday, May 01, 2013

In Sacramento there is a new move to tax oil to use the money for education. Those behind this bill say that big oil has been getting a sweetheart deal in the golden state, paying no tax from the oil they take from the ground.

California is the only top ten oil-producing state in the country that doesn't impose a tax on companies for the oil they extract within its boundaries.

A Senate Committee aims to change that approving a 9.5 percent extraction tax, mostly to fund higher education. But part of the $2 billion a year would also go toward K-12 classrooms and state parks. College students say they need relief from the skyrocketing tuition hikes.

"The cost is increasing so fast that I'm working two jobs. I work 40 hours a week," said Sarah Couch, a Cal State Sacramento student.

But critics believe the oil companies will just pass on the tax to consumers by raising gas prices -- something that the measure's author says is not true.

"The oil prices are set on the global market and that's not just my opinion, that's according to the Rand Corporation," said St. Sen. Noreen Evans, D-Santa Rosa.

There's potentially 15 billion barrels of oil under the Monterey Shale that runs between Northern and Southern California, can be recovered through a controversial method called fracking. The extraction tax would bring in another $1.5 trillion a year if fracking in that area is allowed.

Kern County leaders, though, are especially worried about the tax, fearing oil companies wouldn't want to proceed with this new cost.

"The tax will place much of this critical natural resource beyond recovery and out of reach for California's consumers," said Zack Scrivner, a Kern County supervisor.

The Evans proposal also makes small businesses very nervous. Robin's EnviroVac, which cleans oil fields, says Chevron and others will cut back or eliminate the need for its services.

"That could close my doors. I have 44 employees, and they all have their families," said Robin Brassfield-Cooper, a small business owner.

At least a dozen versions of an extraction tax have failed since 1994.

Since the track record doesn't look good, college students are right now gathering signatures for an initiative to let voters decide whether this should be an oil severance tax, just in case Evans' bill is also rejected during the legislative process.

(Copyright ©2014 KGO-TV. All Rights Reserved.)

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Tags:
california budget crisis, oil, taxes, sacramento, state capitol, politics, nannette miranda
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