New tax on oil could bring money for school

October 12, 2009 7:31:47 PM PDT
Colleges in California have been hit hard by the state budget cuts. Now some politicians and students are standing behind a new tax that would bring in some much needed revenue for higher education, but those in line to be taxed are fighting this proposal.

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Kern County in the Southern Central Valley produces 85 percent of the state's oil with more than 42,000 active wells, followed by Los Angeles and Fresno Counties, but none of it is taxed.

Fremont Assemblyman Alberto Torrico, D-Fremont, wants to charge oil companies a 9.9 percent severance tax.

Monday he brought his campaign to San Jose State and CSU East Bay. His goal is to collect 100,000 signatures in 100 days.

"We're talking about an extraction fee for the privilege of moving that oil. Every other state does it, California should do the same. It is a matter of fairness and justice for Californians," said Torrico.

The money would go directly to all California public universities and colleges which have seen drastic budget cuts.

"It kind of discourages people to go to college. It comes to the point where you want to go to school, you're smart enough to go to school, but you just don't have the funds to pay for it," said a student.

According to Torrico, colleges would still get money from the general fund, but the severance tax would give them an additional $1 billion dollars a year.

The oil industry is against it because companies already pay a special property tax where they drill.

"In the U.S. many states do have a severance tax, but they have lower taxes overall than California," said Joe Sparano, with the Western State Petroleum Association.

Oil prices are controlled by the world market. So, if the tax bill passes, the director of the University of California Energy Institute, Severin Borenstein, says consumers shouldn't have to pay more at the pump.

"And because it won't change the price of oil, it won't change the price of gasoline. What it will do is impose a new tax on one specific industry that happens to be doing pretty well financially right now," said Borenstein.

The revenue and taxation committee is reviewing the bill, then it goes to the whole assembly. Lawmakers have rejected it in the past.

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