California State Assembly Majority Leader Alberto Torrico saw oil companies guzzling California oil and gushing with profits, all while California colleges and universities were struggling financially.
Torrico authored and introduced AB 656 – an oil severance tax – that would give 9.9 percent of California oil profits to a California higher education fund. This tax would contribute $1 billion to higher education.
“We are the only oil-producing state in the country that doesn’t charge the companies a fee,” Torrico said. “It’s a natural resource that we shouldn’t be giving away.”
Texas has an oil fee that brings in $400 million a year to schools, Torrico said. Former Alaska governor Sarah Palin supported bills like Torrico’s and has recognized the need to charge oil companies.
Though the California legislature won’t be making any decisions until January 2010 when it’s back in session, the current bill splits the money between the different higher education communities.
The current break down gives 60 percent of the oil tax to California State Universities, 30 percent to the University of California system and 10 percent to community colleges.
Lawmakers took a look at funding sources and then decided how to split the money in terms of need, Torrico said.
Torrico said he will continue to examine the percentages as the bill moves forward.
The main oppositions of Torrico’s bill are the California oil companies and organizations such as the Western State Petroleum Association and the California Independent Petroleum Association.
The main problem with the tax is it would destroy 10,000 jobs in the oil industry and California would have to depend more on foreign oil, said Rock Zierman, CEO of California Independent Petroleum Association.
“We tax oil differently than most states,” Ziernman said. “We tax it while it’s in the ground. Most states get their money when it’s taken out of the ground. [Torrico’s bill] would be double taxation [for California oil].”
This bill is different from past, similar bills that have proposed taxes on oil, in that it brings the money to a separate higher education fund, not a general fund.
The UC regents and CSU board have yet to take a position on the bill. The Regents discussed the bill at a September meeting.
“There were members of the board that were encouraging [Regents] to take a support position and other members were reluctant,” said Jason Murphy, director of state-government relations at UC Davis.
President of the California Faculty Association Lillian Taize said all higher education institutes should be behind this bill.
“If we had had something like this in place, we wouldn’t have had the devastating cuts and fee increases we had this year,” said Taize, a history professor at CSU Los Angeles.
“Oil companies are opposing the bill despite of record profits,” Torrico said. “They are arguing that there will be higher gas [prices] at the pump.”
The bill prohibits higher gas prices. Taize said people need to see the empty threat of the gas companies; it’s the companies that will be taxed, not the people.
“Public scrutiny will be able to see where every nickel [of the bill] goes,” she said.
Torrico said the UCs and CSUs may be hesitant about this bill because they would be losing control of a large amount of money.
Torrico has visited eight CSU campuses rallying support for the bill. On Monday he will visit UC Berkeley. Torrico hopes to visit other UC campuses in the next 100 days.
“We are trying to get students engaged,” Torrico said. “I want to show support is widespread amongst higher education.”
SASHA LEKACH can be reached at email@example.com.