Big Oil vs. Education

First it came out of the Legislature… then it had an abortive run towards a ballot measure… and now, it’s coming via the Legislature again: The oil severance tax is baaaack.

State Sen. Noreen Evans (D-Santa Rosa) has rolled out SB 1017, a tax that is estimated to raise about $2 billion per year.  Her bill would put a 9.5 percent severance tax on the extraction of oil from the ground or water within California’s “jurisdiction.” BTW: The ‘oil severance tax’ idea has been knocking around the Golden State for many a year. Heck, this isn’t even Evans first shot: She authored SB 241 last year. The bill never made it out of the Senate Appropriations Committee.

Problem is, with a state budget crisis looming yet again, her proposal is to put the money into an endowment and split it three ways among the University of California, California State University and California Community College systems. In addition, health and human services would get 25 percent and state parks would get 25 percent.

Now to the ever popular ‘two hands’ analogies: On the one hand, you have students and faculty (and one assumes, parental units) grousing about tuition levels and the overall cost of education (even with the guaranteed funding of Prop. 98). So this would theoretically, A) add funding to educational (and health and parks) programs, which to many means B) the Legislature then doesn’t have divert budget monies to these items and can use them elsewhere to, say, lessen the deficit.  

On the other hand, you have Gov. Jerry Brown, who pledged not to raise or create any taxes without voter approval… and he’s not likely to break that promise. (Remember why you voted ‘yes’ on Prop. 30 in November?) Doesn’t hurt that he also just formally announced his bid for re-lection + earlier this year, trumpeted the fact that the state had a $4 billion budget surplus.

SB 1017 promotes a tax Brown already said he doesn’t support, and for which we already know voters have already shown lukewarm support… which raises a most curious question.  Why would the voters not be supportive of a tax that hits Big Oil?

Big Oil (however you define it) has always been a popular ‘Boogeyman’ for the left wing but has increasingly ensconced themselves in the mainstream as same. That can happen when you keep raising the price of gasoline while massive numbers of people are out of work. So why the tepid response by Golden Staters? Is Big Oil’s PR machine really that good?

Back to the one hand: Given that SB 1017 proposes a tax to be levied against Big Oil, will that distinction be enough to get it through the labyrinth that is our state legislative process? The bet here is nada. Voters want Sacramento politicians to hold the line on taxes and work to make government work better and smarter – not create more government

And to the other hand (again): One quirk that many point out is the endowment approach, which avoids any mettleing with the funds by allowing income to grow during a booming economy and protecting students and their families during the down times. Many other states already sport a tax on oil extraction using the same model and it does quite well funding their respective education systems. Let’s see who has the bigger stick: the students or oil.