With the 2012 passage of Proposition 30, voters were assured the significant tax increase would go entirely to education. However, less than 50 percent actually does.
Now, a new bill is moving through the Legislature, claiming to tax oil and gas production for – ahem, you guessed it — education.
SB 1017, an urgency measure, would impose a severance tax on the extraction of oil and natural gas, effective immediately after being signed into law.
Pay attention to the taxman behind the curtain who wants to add more taxes onto oil and gas production.
However, if the California legislature doesn’t pass an oil severance tax this year, billionaire hedge fund manager, Tom Steyer, is preparing a ballot initiative for 2016.
Because Gov. Jerry Brown vowed that all new tax increase proposals would go before the voters, there are reports which say he’s largely rejected the oil tax this year. But NextGenClimate Action, Steyer’s political action committee, can do it for Brown instead, with the initiative to create an oil severance tax in 2016.
California voters previously rejected Proposition 87 , an oil extraction tax, in 2006.
What the bill does
SB 1017 would siphon 50 percent of the oil tax revenues to California’s universities and college system, 25 percent to the state parks agency, and 25 percent to the state welfare system.
“California is losing out on billions in revenue, amounting to a massive giveaway to big oil companies,” said the bill’s author, Sen. Noreen Evans, D-Santa Rosa. Evans is also author of three previous bills attempting to tax the oil industry more than it currently is. “There is too much profit to be made in California,” for oil producers to leave, according to Evans.
Students for higher taxes
“A UC-Berkeley-based student group called Californians for Responsible Economic Development began circulating petitions for an oil-extraction-tax ballot measure last April; when they missed their signature-gathering deadline in September, they started anew with a revised measure, the Contra Costa Times reported. “But in November, the group changed its name to Students’ Voice Now and announced it would partner with lawmakers to push for a bill instead.”
“Tuition at the UC and CSU increased 310 percent and 283 percent respectively in the last 10 years,” a Lake County News editorial said. “In 2010, California ranked 49th in the nation for the number of students who go straight from high school to college.”
However, the money would not be used to lower tuition costs or hire more instructors to accommodate students seeking to graduate in four years; the oil tax money would go to deferred maintenance, equipment replacement, and bond payments.
Another new education board
In a fox-guarding-the-henhouse move, this bill would create the California Higher Education Endowment Corporation a new education board. This new board would administer this new tax revenue stream, and perform the oversight of the spending.
The bill allows the new board to make all hiring and pay decisions, and has no limitations on the size of the board.
Bring in the billionaires!
Billionaire hedge fund operator and “green” energy merchant Tom Steyer pledged $100 million in the 2014 election cycle to help elect Democrats who favor “green” energy and oppose the Keystone pipeline.
Steyer founded Farallon Capital Management L.L.C. in 1986, which has grown to become one of the largest and most successful hedge funds in the United States with more than $20 billion in funds under management, according to Powerline blog. Steyer’s net worth is reported to be $1.6 billion.
Ironically, the global warming champion Steyer has made millions off of the oil and coal industries he claims are destroying the environment. “Steyer owes his fortune in large part to the fact that he has been one of the world’s largest financers of coal projects,” Powerline blog wrote in April. “Tom Steyer was for coal before he was against it.”
“Looked at another way, the coal mines that Mr. Steyer has funded through Farallon produce an amount of CO2 each year that which is equivalent to about 28% of the amount of CO2 produced in the US each year by coal burned for electricity generation,” Powerline found.
Steyer, now called a “wealthy environmentalist,” left Farallon in 2012 to focus on political and environmental causes. He waged a battle over environmental policy in California, spending $32 million in the November 2012 election on Proposition 39 to change a corporate tax formula to raise revenue for green energy and conservation projects.
At a Sacramento Press Club event in 2012, I asked Steyer, “There have been many news stories of your own investments into green tech companies, and green businesses. How many of your businesses would benefit from an infusion of this money?”
Steyer looked incredulous and said that he had no idea that people were saying that about him, but that his businesses will not benefit from the passage of Prop. 39. Steyer added: “I don’t think Prop 39 is going to change many lives.”
“Only days before Steyer announced that he would be leaving Farallon, the San Diego Reader reported that he still had investments in several companies that provided energy from coal and oil,” National Review reported. “His company held these investments even while Steyer was campaigning against California’s Proposition 23, which would have suspended California’s self-imposed cap-and-trade law.”
Additionally, Steyer spent millions of dollars to prevent the construction of the Keystone XL pipeline. The pipeline would dramatically cut energy costs for Americans, and grow oil production in this country by increasing access to refineries. It would generate millions of dollars in state and local tax revenues, and significantly reduce the amount of oil the U.S. imports by 40 percent.
Additionally, what many are not aware of is after five years of intensive regulatory review the U.S. State Department found the Keystone project was environmentally stable, and would not greatly increase carbon emissions because the oil sands in Alberta will be developed anyway, according to Bloomberg.
Is SB 1017 about education or is it a foray into a ballot initiative to tax the oil industry? It seems that either way, Gov. Brown has his bases covered with a tax increase.