UC Berkeley students have initiated a campaign for an oil tax to generate funds for education, among other government entities.
Californians for Responsible Economic Development — the student-run committee — hopes to repeat the success of Proposition 30 by focusing on mobilizing students.
The California Modernization and Economic Development Act would implement a 9.5 percent severance tax on oil and natural gas extracted in California and expects to create between $2 billion and $2.5 billion in revenue. The new revenues will be dedicated to increasing funding for education, state parks and county governments, according to the campaign’s website.
California is the fourth-largest producer of crude oil in the United States, according to the U.S. Energy Information Administration’s 2012 report. But according to UC Berkeley student and communications director for the group Sofie Karasek, the Golden State is the only major oil-producing state that does not have a significant severance tax on oil and natural gas.
John Ellwood, a professor at the Goldman School of Public Policy, expressed concern regarding the impact of the proposed legislation on consumers. Although such severance taxes in theory pass their costs on to producers rather than to consumers, he said that in practice this is often not the case. Additionally, due to the political and economic strength of oil producers, he does not expect the initiative to succeed.
“I’m personally in favor of the proposal, but I don’t see the politics of it,” he said.
The initiative was recently endorsed by the UC Student Association, according to the campaign website. UC Berkeley student and campaign manager Harrison Tibbetts said he expects support in the coming weeks from California State University and California community college student associations.
If the initiative passes, $300 million will be allocated to K-12, and $900 million will be allocated to higher education institutions in the hopes of restoring tuition to 2010 levels.
California businesses would receive about $440 million in subsidies from the tax to transition from traditional energies to carbon-free and reduced-carbon sources of energy, according to the campaign’s website. An additional $66 million annually would be allocated to California state parks, land conservation and the reduction of user fees, while $2 million to $6 million would be allocated to county governments.
“Our proposal is more of a jobs bill,” Tibbetts said. “We want to create socially responsible programs that won’t create new expenses but rather encourage new investments.”
Greg Hayes, communications director for Senate Appropriations chair Kevin De Leon, D-Los Angeles, said the senator philosophically agrees with the proposition’s goals. But due to recent tax increases and other bonds expected to be introduced to the Legislature this year, Hayes said that at this point, the state needs to focus more on fiscal discipline than another tax increase.
“We want to make sure we do the types of things that ensure economic growth first,” Hayes said.
Even with the success of Prop. 30, passing the legislation will not be easy. In the next few months, the committee will have to raise significant sums of money and quickly establish widespread grassroots support.
“The question is, do you have a lot of money?” Ellwood said. “To get on the ballot, you need millions to sign, or you need the social demand. But citizens of California have just raised their taxes. I don’t see them supporting another tax hike.”
Alex Berryhill covers higher education. Contact her at [email protected].