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Introduced by Sen. Noreen Evans, D-Santa Rosa, SB 241 would allow the state Department of Conservation to administer a 9.9 percent oil severance tax on companies extracting oil in California. According to Senator Evans’ communications director Teala Schaff, 93 percent of the tax revenues would be allocated to public higher education while 7 percent would go toward renovating state parks.

“California doesn’t tax on oil, so it is a fairness issue because other states have oil taxes, and if people take something from the state through oil, this is a way for us to give something back to the state,” Shaff said.

Shawn Lewis, executive director of the Berkeley College Republicans, said that it is counterintuitive to make higher education dependent on the oil industry when general oil consumption in California is decreasing.

“If this oil severance tax becomes law, oil production in California would be the most costly in the nation,” Lewis said.  “It is no secret that these increased costs would be passed on to consumers, and low income families would be especially hurt by any further increases to the cost of gasoline.”

Despite a fear that oil taxes would have an effect on consumers and increase the price of oil, Shaff said that the bill would not have such a large impact on global oil prices.

A group of UC Berkeley students pushed for a similar bill — the California Modernization and Economic Development Act, which is another oil severance tax that would raise a projected $2 billion for higher education, infrastructure and county governments. Sofie Karasek, a UC Berkeley student and press secretary for CMED, said that a major concern with SB 241 is that it does not provide funds to municipal governments.

“While an oil severance tax must be implemented, it is important that the $2 billion raised is also invested in state infrastructure, green technology and vocational training, as CMED does,” Karasek said.

Evans’ bill gained wide support among student protesters during the rally at the capitol on Monday. Supporters viewed the severance tax as a possible long-term solution to the problem of decreasing state funding of public universities.

“It was really encouraging to see so many students in support of the oil severance tax,” said Karasek via email. “It signifies that young people recognize the importance of investing in our future, and passing an oil severance tax is a great way to start.”

The bill is currently being discussed in the Committee on Senate Governance and Finance and, if made into law, will take effect in January 2014.

Contact Seif Abdelghaffar at sabdelghaffar@dailycal.org.

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We have a problem when California, the ninth largest economy in the world, has a 9.8 percent unemployment rate. Enrollment at California community colleges has dropped by 500,000 since prices began increasing in 2008. This is due to the doubling of unit costs for some of the lowest-income people in California. How can we expect people to get high-paying jobs if they can’t even afford to enroll in our community colleges?

One way we can start to heal California’s economy is with an oil severance tax. It is time Californians knew the truth about this tax. A severance tax is a tax on oil producers, not consumers. Oil interests have spent hundreds of millions of dollars over the course of decades turning this falsehood into truth in the minds of voters. The campaign for a California oil tax seeks to turn the spotlight on the numbers and facts about severance taxes.

First, we must ask ourselves why Alaska and Texas would implement a 25 percent severance tax and a 7.5 percent severance tax, respectively? After they passed these taxes, which raised substantial revenue, why didn’t their gas prices skyrocket? The answer is because oil is not a state, or even a national, commodity. Oil is a commodity bought and sold globally based on the supply and demand of the global market prices for oil. Because oil prices are mostly set on the global market, state severance taxes aren’t passed on to consumers.

Much of America’s diesel and oil comes from the Middle East. We buy from there because it is cheaper for us to do so, while we sell our oil to Europe and other parts of the world because they are the highest bidders. To re-emphasize the import and export dynamic of the global market: California extracts 349 billion cubic feet per year from natural gas wells. We import more than two trillion cubic feet of natural gas from other nations.

Now some may ask, and some have already asked, about the feasibility of an oil tax measure. After the passage of Proposition 30, voters may not want to pass new taxes like oil severance measures because they are incorrectly viewed as a tax on the people. But there are few measures more regressive than a sales tax, and voters passed that last November. On the other hand, a severance tax costs the consumer virtually nothing. The only reason people would reject an oil severance measure is if they were deceived about its effects.

Our vision is to reinvigorate California’s economy, lower the unemployment rate and, eventually, lower taxes across the board. We can use revenue from an oil severance tax to refund our priorities, such as education, infrastructure and green technology, while decreasing regressive taxes on the people in the long run. This would put more people to work and be a boon to California’s economy.

Our roads are crumbling. Tuition and fees are holding steady at $13,200 for the foreseeable future. Teachers laid off over the last few years remain laid off. Businesses wanting to expand can’t do so because of prohibitive costs. High fees at state parks are depriving lower-income families of the ability to visit. There are clear and present issues in our state that need to be fixed, and this measure is one of the best ways to do so.

This will not be resolved in the debate halls of our legislature but rather by the people, from whom all legitimate authority emanates. We are counting on the people of the state of California to pass the measure. Like our governor has stated, the people alone should have the right to decide on a tax increase, and the proponents of this initiative will fight to present it to them.

Harrison Tibbetts is the lead proponent of the California Modernization and Economic Development Act.

Contact the opinion desk at opinion@dailycal.org.

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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 aberryhill@dailycal.org.

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