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Davis, California

Wednesday, February 21, 2024

Proposed oil taxation bill overturned at assembly

The California budget deficit has recently sparked a multitude of reactions from California state officials.

California Assembly speaker Fabian Núñez recently proposed Assembly Bill 9xxx, which was intended to raise revenues for teachers in order to offset deficits the education system has faced due to recent state budget cuts. The bill planned to tax large oil companies to gain extra funds – however, the bill was turned down by the state assembly Wednesday.

While California is facing billions in cuts to schools, big oil companies are raking in record profits – without paying for the oil they take from California, said Núñez in a press release. If red states like Texas, Colorado, and Montana tax oil production to fund the services they value, then so should we.

AB 9xxx would have set a 6 percent severance tax on oil extracted in California. The profits would have been used to offset teacher layoffs from Governor Arnold Schwarzenegger’s budget cuts to the education system, the press release said.

Although Núñez intended for AB 9xxx to prohibit oil producers or purchasers from using the tax to raise prices at gas pumps, California residents and organizations remain skeptical that the consumer will be unaffected.

Representative Audra Strickland was one of the Republican members of the assembly who voted against the bill Wednesday.

Democrats are not the heroes saving the day for education but the very culprits that have caused this fiscal crisis we find today in our state, said Strickland in an e-mail release. AB 9xxx is, at best, a publicity stunt solely to say we are addressing the state’s education needs and, at worst, a continuation of the failed tax and spend policy that has created the state’s financial emergency.

Núñez faced mainly Republican opposition when presenting his bill to the assembly. State representatives such as Strickland strongly opposed the bill, and thus it was unable to pass with the two-thirds majority support that it needed.

It’s a tax increase and that tax increase on the oil companies will be transferred over to the average consumer who is purchasing gas, said Sam Chung, communication director for Strickland. Gas prices are so high already, and a lot of people are just looking to get from home to work and back … and they shouldn’t have to compromise that just because the California legislature wasn’t able to manage [its] budget correctly.

Increasing taxes is not a solution to the California budget deficit, Chung added. California officials must discuss specific stipulations of the budget deficit before raising prices that could potentially make a negative impact on consumers.

A California legislature needs to be able to manage [its] budget first before we even talk about putting taxes on people, Chung said.

The California Taxpayers Association shares similar opinions that the budget deficit should be sufficiently discussed before any action is taken.

We should be discussing how we are going to address the budget deficit; those types of discussions are not happening, said Teresa Casazza president, of the California Taxpayers Association. [AB 9xxx] was introduced 24 hours before it was heard…. It was a knee-jerk reaction to the budget deficit.

If a tax was imposed on California oil companies, ultimately there would be additional costs that would lead to higher gas prices for consumers, Casazza said.

To say that the oil producers don’t pay their tax in California is not correct, Casazza said. These types of higher taxing prices would make a greater dependency on foreign oil, which will make oil more costly…. We are already too dependent on oil [being imported] from the Middle East.

California is currently in the top-10 highest-taxing of all states that produce oil, at approximately number five. If AB 9xxx were to be imposed, California would be by far the highest-taxing state in the nation, Casazza said.

California officials continue to propose solutions to the budget deficit, but until an agreeable solution is reached, California will continue to face this devastating budget struggle.

More information about speaker Núñez’s bill and the California budget in general is available at democrats.assembly.ca.gov/members/a46/default.aspx.


CAITLIN COBB can be reached at city@californiaaggie.com.


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