An oil severance tax bill, SB 1017, passed a California state senate committee yesterday. The bill would place a 9.5 percent tax on oil, with 50 percent of the money going to higher education (specifically, deferred maintenance, equipment replacement, and bond repayment) and the remainder divided between state parks and health and human services. The bill has attracted support from higher education - earnest young college students lobbied and Associated Student presidents testified for the bill in committee. The students lobbying for the oil severance tax are part of Generation Hot, the people most affected by climate change.
For emphasis: SB 1017 will not hire a single professor or lower a single student loan. It will simply go to deferred maintenance, equipment replacement, and bond payments.
If the state legislature doesn't pass an oil severance tax this year, Tom Steyer says he's preparing for a ballot initiative in 2016. His recent poll claims 64 percent support. It's high, albeit short of the 70 percent rule of thumb cited by consultants who assume that negative advertising will flip 20 percent of those initially favoring the idea. In 2006, California voters defeated Proposition 87 after oil companies spent nearly $95 million to oppose it.
Proponents of an oil severance tax cite statistics. California is the only state without an oil severance tax, while Alaska, Texas, and North Dakota tax their oil at 25-to-50, 7.5, and 6.5 percent respectively. The tax would raise an estimated $1 to $2 billion; for perspective, the 2014-15 Governor's proposed budget for California's higher education system is $26.3 billion.
Evans' bill needs a 2/3 supermajority (California rules for any new tax), and Governor Jerry Brown has rejected the idea for this year. So it's more likely that the oil severance tax will come before the voters in 2016 via Tom Steyer.
Tom Steyer sees a fracas over fracking, and in particular wants to see that
1) the oil and gas industry is paying their fair share of taxes, royalties, and impact fees for the natural resources they are already taking; andIn other words: he supports a tax, not a moratorium, on fracking.
2) the techniques in question can be performed safely, in each specific geologic location, supported by independent science and proven beyond a realistic doubt.
Would a 9.5 percent tax on the Keystone pipeline make it all right?
Is the oil severance tax in competition with the fracking moratorium bill for activist time and resources? Or is it a genuinely bad idea put forth by well meaning people?
Other states that benefit from oil severance taxes become reliant on those ongoing taxes, and thus their policies further the extraction of oil. Alaska's government is heavily dependent on the oil industry for its revenues. Fracking is making the North Dakota state government rich (while creating housing shortages and crime sprees). In Utah, a tar sands mine is being justified as "for the benefit of the children" - oil money funds the School & Institutional Lands Trust Administration.
Normally progressive California policymakers now want California to depend on continued fracking to fund deferred maintenance at California universities. California is being fracked for oil, not natural gas, and not just any oil, but oil that includes the most carbon intensive oil in the world - dirtier than the Canadian tar sands. Is that the message that California policymakers want to send to Generation Hot - "your continued education depends on our continued fracking"?
Progressive California groups and policymakers need to find other ways to fund deferred maintenance at the University of California without fracking up the Golden State. And California activists need to focus on passing SB 1132. California fracking needs to be not taxed, but stopped entirely.