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California oil tax survives first Senate committee vote

California oil tax survives first Senate committee vote
Pump jacks in an oil field over the Monterey Shale formation in Kern County. (David McNew / Getty Images)

SACRAMENTO — A proposal to charge a tax on oil pumped from the ground in California was approved Thursday by a state Senate panel on grounds that it would help fund higher education in the state.

The Senate Education Committee voted, 5-2, to advance the bill that would levy a 9.5% tax to raise $2 billion annually to be divided among state universities and colleges, state parks and human service programs.

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"California is the only major oil producer in the world that does not collect taxes on oil production," Sen. Noreen Evans (D-Santa Rosa) told the panel. "As a result, California is losing out on billions of dollars in revenue amounting to a massive subsidy to big oil companies, and as a result our children are suffering."

However, the oil industry has been able to kill similar bills in past years and even some supporters worry the measure may not survive in other committees that deal with tax policy.

Committee member Sen. Marty Block (D-San Diego) said the education panel, with its narrow purpose, had to approve SB 1017: "There can be no question that higher education needs additional funding," Block said.

The measure was backed in testimony by dozens of students from systems that would benefit: University of California, California State University and California Community Colleges. Money would also go to the State Department of Parks and Recreation and the California Health and Human Services Agency.

The measure was opposed by the Western States Petroleum Assn. and some local elected officials, including from Kern County, a major oil-producing area.

"We depend on petroleum to move goods and people around California," said Kern County Supervisor David Couch. He said unemployment in his county was already 13%. "A nearly 10% oil severance tax would cost thousands of jobs in California," Couch said.

The California Chamber of Commerce called the bill a "job killer." Eloy Garcia, a lobbyist for the Western States Petroleum Assn., said the measure would discourage oil production in California, where he said many people don't want it. "We don't want it, but we want the revenue," Garcia said to summarize a viewpoint of some backing the tax. "You can't have both."

Senate Republican leader Bob Huff of Diamond Bar said the goal of the U.S. should be energy independence. "This is obviously a bill that would fly opposite of that," Huff said.

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