Democratic lawmakers revive oil extraction tax for California

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After California voters approved a multibillion-dollar increase to sales and income taxes in November to help fund education, Democratic legislative leaders promised restraint, saying they would not be seeking additional tax increases any time soon.

“The voters do not want us to burst out of the gate to approve more taxes,” Senate President Pro Tem Darrell Steinberg (D-Sacramento) said in December as the new session began.

That was then, and this is now.

On Tuesday, two leading Senate Democrats proposed a new tax on oil pumped from the ground in California to raise $2 billion annually to pay for state university and parks programs.


Senate Judiciary Committee Chair Noreen Evans (D-Santa Rosa) and Senate Budget Committee Chairman Mark Leon (D-San Francisco) said the 9.9% “severance” tax charged to oil producers in California would have California follow the lead of other states.

“California is the largest –- and only -- oil producing state in the nation that does not tax its vast oil resources,” Evans said. “California’s oil resources have made trillions of dollars in profits for the oil industry. Imagine what mere billions could do for Californians.”

The California Education and Resources Reinvestment Act would send 93% of the money to the University of California, California State University and California Community College systems, with the rest going to the California Department of Parks and Recreation.

Similar oil taxes have been proposed before but failed to get the votes needed in the Legislature, but Democrats now hold a supermajority, allowing them to pass tax increases without Republican votes.

Senate Republican leader Robert Huff said Californians would not approve of “a $2 billion hike in prices at the pump,” as the tax hike is passed on to consumers.”The ink has barely dried on the recently passed billions in tax increases that will impact all Californians and this move is in conflict with their party’s leader, the governor, and his call for restraint,” Huff said.

Rhys Williams, a spokesman for Steinberg, said the senator’s comment in December “doesn’t preclude a discussion or exploration of the proposal’s strengths and implications.”



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