UC Officials Voice Concerns in Debate Over Proposed Oil Tax

Despite the millions of dollars higher education stands to gain under a bill that would impose oil and gas severance taxes, officials from the University of California have expressed concerns about the extent to which the UC system will benefit if the bill passes.

Assembly Bill 656 would levy a 9.9 percent severance tax on all oil and natural gas extracted by oil companies from the state and its ocean holdings beginning in January 2010.

The bill, first introduced by State Assembly Majority Leader Alberto Torrico, D-Fremont, has the potential to raise up to $1 billion that would go to funding public higher education.

"California's longterm economic future depends on a strong higher education system and AB 656 will provide the financial support our universities and community colleges need," Torrico said in a statement.

However, UC spokesperson Steve Montiel said university officials have concerns about the distribution of those benefits.

According to Montiel, officials from Torrico's office who are in discussions with the university are proposing that 60 percent of the revenue will go to the CSU system while 30 percent will go to the University of California.

Ten percent will go to funding renewable energy curricula and programs at community colleges. Proposition 98 already requires a minimum share of the state's General Fund to be allocated to community colleges and K-12 schools.

"We believe any legislation that proposes to provide additional support for higher education needs to treat the UCs and CSUs the same," Montiel said.

Montiel added that the university wants to know whether the revenue generated under the proposed tax would be available exclusively to higher education and would not replace funding already allocated to the university.

Scott Macdonald, spokesperson for Californians Against Higher Taxes, said imposing a severance tax would raise the cost of extracting oil and drive down oil production, resulting in higher demand for foreign oil and thousands of lost jobs.

"Taxes have already gone up this year $12.5 billion," he said, adding that he believes keeping taxes low will help promote economic growth.

Still, according to Kim Geron, vice president of the California Faculty Association, many states that provide higher education with revenue generated from taxing oil companies have lower student fees compared with other parts of the country.

Geron, an associate professor of political science at CSU East Bay, said many students and faculty are excited about the money that could be used to fund instruction, additional classes and perhaps even cut the demand for student fee increases.

"Public education is slowly becoming too costly and elitist for California," he said. "We're hoping we can get people in California to support this bill."

Tags: AB 646, ALBERTO TORRICO