State Democrats Want to Tax Oil Production, but will Schwarzenegger Slip their Way?
An oil drill in Baldwin Hills | Photo by Jonathan Alcorn (Sundogg) via LAist Featured Photos on Flickr
Surprise, surprise. Cash-strapped California is the only of the 22 major oil states that do not tax companies for taking the black gold out of the ground. Now with the BP oil spill in the Gulf and Prop 23 at the public forefront, Democrats this Summer have crafted two budget proposals that put an oil production tax in the picture.
Such a tax would only bring $1.2 billion. That's a hefty sum, but hardly enough to cover California's $19.1 budget deficit. But let's say the Golden State followed in the footsteps of former Alaska Governor Sarah Palin, who in 2007 raised taxes to 25% of the value of extracted oil and gas. California would gain $4 to $8 billion, depending on where the benchmark price for crude was.
Governor Arnold Schwarzengger, along with Republicans, has signaled his stance against any new taxes. Nonetheless, he's been on a crusade of sorts against oil companies, which this month placed Prop 23 on the ballot. If passed, it would significantly weaken his landmark climate bill.
"Greedy oil companies out of Texas, they don't care if anyone dies, they don't care what pollution they create in the Gulf of Mexico, because they only care about one thing, and this is profits," Schwarzenegger said in May.
A tax would not affect those Texas companies, but local ones. California-based Chevron has steered clear of funding Prop 23.
Under the Senate plan, oil tax money would go to counties to cover services, but no matter the outcome, don't expect it soon -- even if the budget is officially due this Thursday. In the past 30 years, California politicians have delivered a budget by the July 1st deadline only 10 times.