CSUN University News Clippings

Can bill for state oil tax stave off education cuts?

(November 3, 2009)

By Sarah Rohrs
Published: 11/02/09

For California Maritime Academy and other colleges and universities, tuition hikes, unpaid furloughs and fewer class offerings have become a way of life.

Students, teachers and others are banking on a proposed state bill to raise funds for higher education and stave off further cuts.

Assembly Bill 656, also called the Higher Education: Oil and Natural Gas Extraction Tax, would enact a 9.9 percent tax on California’s oil removed from the state’s land and water, according to the California Faculty Association, the bill’s sponsor.

If enacted, the tax could raise between $1 billion and $1.4 billion annually, CFA political action legislation committee chairman John Travis said.

But opponents worry the so-called “oil tax for higher education” bill would hurt consumers, resulting in higher gas prices as oil companies pass onto consumers the tax’s cost. They cite a possible loss of jobs as another unwelcome outcome.

Proponents, such as bill author Assemblyman Alberto Torrico, D-San Jose, argue the bill will not result in higher gasoline costs, and the proposed tax would have a negligible impact on oil companies’ profits.

If enacted, the largest share, or 60 percent, would go into the 23-campus CSU system (including Vallejo’s California Maritime Academy) which depends heavily on state funding, Travis said.

Some 30 percent would go to the University of California schools, and 10 percent for community colleges, Travis said.

Cal-Maritime marine transportation instructor Scott Saarheim said the bill is long overdue.

“It’s an investment on higher education that will return money to the state,” Saarheim said.

Torrico said the bill is needed because the state’s colleges and universities are in crisis. “Next year, we’re going to spend more on prisons than on higher education. We’ve got to do something,” he said.

California is the only oil-producing state which does not have an oil extraction tax, Travis said, adding the bill is modeled after a similar tax in Texas, which funds higher education.

To protect consumers, the bill would establish an oversight board to allocate and oversee funding allocations. In addition, the bill specifies that oil companies would be prevented from passing on costs through higher gasoline prices, Travis said.

But while colleges are trying to drum up support for the bill, those opposing it are equally vocal.

Opponents say AB 656 would drive up gasoline prices, and could lead to a loss of tens of thousands of jobs, said California Taxpayers Association spokesman David Kline.

Kline said the bill’s so-called consumer safeguards could not be enforced and costs would be passed on at the gas pump.

“By increasing the cost of oil production, it would create an incentive to bring in oil from other countries, which would reduce production jobs in California,” Kline said.

Further, Kline said the argument that California lacks a gas extraction tax is specious. He said California already taxes oil companies through income and property taxes, and regulatory fees.

Oil companies are also opposed to the bill, Travis said.

A Western States Petroleum Association spokesman contacted by telephone refused to comment on the bill and referred questions to Kline.

The bill has passed through several committees and may be heard in the Assembly in early January, Torrico said.

Publication: Times-Herald