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Posts Tagged ‘oil severance tax’



Key Democrats Plan New Push for Oil Severance Tax

Thursday, August 6th, 2009

johngaramendiGov Lite John Garamendi and Assemblyman Pedro Nava tell Calbuzz they are preparing a new political offensive to push aggressively for a 9.9 percent per barrel severance tax on oil producers in California.

Having led the charge to defeat the governor’s proposal for a lease authorizing oil drilling in state waters off the coast of Santa Barbara, the two are seeking to harness the momentum built by the statewide coalition of environmental groups that quickly mobilized in that fight.nava

“The taxpayers have been giving their oil free to the oil companies for 100 years, and it’s time for the oil companies to start paying it back,” Garamendi, who’s running for congress, told us. “The environmental community, having rallied to defeat (Schwarzenegger’s offshore leasing plan) is very engaged on this.”

Nava, who’s seeking the Democratic nomination for attorney general, said in an interview that he is also working with environmental groups “invested in opposition to offshore drilling” as he puts together legislation for a severance tax to raise $1-1.5 billion a year.

“Do the math,” Nava told us. “The governor was willing to sell of the coast for $100 million – this would raise over $1 billion a year.”

Torrico-AlbertoA proposal to impose such a tax and earmark the money for higher education, by Assemblyman Alberto Torrico – who’s also running for attorney general – is pending in the Legislature. Nava said his bill would not restrict the use of new revenue within state government: “Earmarking the money divides people,” he said.

Because California is the only oil-producing state that does not impose a severance tax, such a proposal could gain political traction, at a time when Democrats insist they will not support further education and social welfare cuts after joining in passing a red-ink budget that slashed many programs.

Passing a tax increase would be an uphill fight because it requires a two-thirds vote in both houses. However, the public unpopularity of oil companies offers Democrats perhaps their best opportunity to pressure Republicans on a revenue-raising measure. Schwarzenegger at one point suggested an oil tax, but dropped the idea in the face of opposition by GOP lawmakers.

John Doherty, a legislative aide to Torrico, told us the assemblyman did not have the votes to get his proposal out of the Assembly Revenue and Taxation Committee earlier this year; Torrico plans to use the rest of the current legislative session to build support for passing it in 2010, he addedm a wide-open election year in which many legislators will be seeking statewide offices.

A 9.9 percent severance tax would generate about $1.4 billion a year with oil at $70 a barrel, according to the lieutenant governor. A barrel of crude oil was priced at $71.97 on Wednesday.

In the interview with Calbuzz, Garamendi also addressed three related issues, saying he:

-Expects the governor, having “set the stage for a new re-run,” to try again to push through the controversial Tranquillon Ridge project defeated in the Assembly after passing the Senate by one vote, perhaps when the Legislature reconvenes later this month.

-Plans at next week’s meeting of the State Lands Commission to hold a risk-assessment hearing to weigh the relative merits of drilling in state waters from offshore and onshore facilities: “Intuitively, drilling from the land, you’re not likely to spill in the ocean (while) drilling from the sea you’re likely to spill in the ocean,” he said, “We want a data base to determine the facts.” The issue is timely because Venoco Oil Co. is proposing an onshore slant drilling project in state waters off Santa Barbara, not far from the Tranquillon Ridge project.

-Dismisses speculation that if he (Garamendi) wins his congressional race, Schwarzenegger will be able to hand-pick a successor as lieutenant governor who would swing the balance of power on the lands commission in favor of authorizing an offshore lease. The governor’s nominee would have to be confirmed by the Democrat-dominated Legislature, three of whose members are already running for the post, he noted.

“There’s a lot of foolishness about this,” he said of speculation in Sacramento about such a scenario.

Poizner Plays Prius to eMeg’s High-Rolling Hummer

Tuesday, August 4th, 2009

poiznerfingerInsurance Commish Steve Poizner on Monday offered himself as the Prius candidate for governor – the guy with “a hybrid mix of skills” – while taking a few whacks at his big-spending GOP rival Meg Whitman during his first campaign conference call with reporters.

Pledging to “get California back on track,” – an implicit critique of Gov. Arnold Schwarzenegger – Poizner argued that although he’s also a Republican, “I don’t think people look at the position of governor with a partisan perspective.”

The next governor’s top challenges will be [note: Calbuzz decoder ring translations in brackets] to “modernize and overhaul state government,” [cut spending throughout government] and “bring jobs back to California.” [cut taxes and regulations].

Sounding much like Schwarzenegger did when he pledged to “blow up the boxes” and remake California government, Poizner said he would cut spending not with an axe, but with a scalpel, agency by agency, department by department, as he said he’s done in the office of the Insurance Commissioner.

Asked why anyone should believe that he could do what Schwarzenegger has been unable to do, Poizner first gave a standard stump reply: “I’ve never been confused with Arnold Schwarzenegger.” Informed by an intrepid  news hound that while “cute,” this was not a real answer, Poizner added that he is an entrepreneur, an engineer and a problem solver with a track record [which Arnold did not have].

Voters, he said, are looking for “an outsider with a track record to deal with insiders.” That, he suggested, is one factor that separates him from eMeg – the former eBay CEO – who has no government experience. “Running the state of California is not like running a company – it’s not how to grow and gain market share” but modernizing and overhauling state government, he said.

Poizner stated that 3,000 people a day week are leaving California because of high taxes and a lack of jobs (his source is U.S. Census data on net migration for California – but his declared cause for it was challenged by a recent PPIC study). The solution, he argued, is to cut taxes.

What taxes, we asked. We’ll get to that within a month, he promised, saying he’s got a policy analyst from Mitt Romney’s failed presidential campaign – Lanhe Chan – and a “first class policy shop” working on a program of tax cuts. [Decoder ring update: Don’t call us, we’ll call you.]

He refused to say whether he’d support an oil severance tax, but he did say he favors the Tranquillon Ridge drilling project in Santa Barbara and other efforts to increase oil drilling from existing platforms and onshore facilities using slant-drilling technology. “I don’t support building new platforms,” he added.

[This makes him safe to all those Republicans in coastal counties whose homes overlook the ocean and who will vote for GOP candidates as long as they don’t mess with their views.]

As for eMeg, Poizner noted that “one of my opponents spent more in June than I’ve spent in total.” Californa, he added, “has a history of wealthy business people parachuting in” but that this has tended to backfire “when people think you’re trying to buy the election.” [hmmm...]

In round figures, Poizner has raised about $5.4 million, including $4.2 million from himself and $1.2 million from others, and spent about $1.7 million, leaving him with about $3.7 million in the bank.

Whitman, on the other hand, has raised about $25 million, including a whopping $19 million from herself and $6 million from others, and has spent a sort of   astonishing $6 million, leaving her with $19 million in the bank.

Poizner – a multi-millionaire himself – said “We’re going to raise all the money we need.” But, “If sheer financial wealth is all you need, we’d have had a Governor Checchi,” he said, referring to the former Northwest Airlines chieftain who lost the 1998 Democratic primary after spending more than $40 million of his own money.

He said he would “spend money carefully – I’m not going to go down the road of reckless spending.” And to underscore the point, his communications director, Jerrod Jarrod Agen, later sent over some helpful items from eMeg’s spending report including:

– Private Jets – $100,926.71: ACM Aviation, LLC
– Consultants – $2,111,774.29
– Crystal Valet – $9,283
– Wolfgang Puck Catering – $10,962
– Internet — $994,278.67: Including $943,067.54 to Tokoni Inc.*

“We were quite surprised that the Whitman campaign has spent over $6 million,” Agen said, “not necessarily to talk to voters.”

Whitman spokeswoman Sarah Pompei had no apologies. “Meg has a budget that was created with the goal of winning on election day both in June and November of next year. And the money has been invested into campaign operations thus far is well within that budget,” she said.

“We’re allocating resources to put ourselves in the best position to communicate with voters about Meg’s vision for the future of our state.”

P.S. A Calbuzz tip of the green eyeshade to Poizner for making himself available for some serious questioning — something Her Megness, with her big fat fancy-pants consulting staff, has steadfastly refused to do.

* Tokoni Inc. was founded in n August 2007 by Alex Kazim and his wife, Mary Lou Song. Kazim previously held several top management positions at eBay, including president of Skype, eBay’s internet communications flop, a Whitman project that ultimately cost eBay about $2 billion.

What Sacramento’s Wimpy Democrats Aren’t Doing

Monday, August 3rd, 2009

donkeyWhen Calbuzz bashed the Democrats’ legislative leaders for getting rolled by Arnold and the Reeps in the budget fight, we heard some cries of “foul” from defenders of Assembly Speaker Karen Bass and Senate President Darrell Steinberg.

Steinberg spokesman Jim Evans and blogger/analyst Bill Bradley were among those who dropped by Calbuzz to comment on the post, arguing essentially that Bass and Steinberg had cut the best deal possible.

“The budget sucks, of course,” wrote Mr. Crankypants Bradley, “And your real world alternative would be … What?”

A fair enough question, and one we answer with three words of advice for the Democrats: Go on offense.

As a political matter, the plain fact is that the Republicans in Sacramento out-thought, out-maneuvered and out-led the Democrats throughout the budget fight. Despite huge majorities in both houses, the D’s remained in a defensive crouch, constantly reacting to whatever the Republican governor and his allies decided to do, consistently wilting while constantly whining that the two-thirds vote budget requirement made it impossible for them to do more.

No one’s saying that the two-thirds vote doesn’t make life difficult. We’ve argued repeatedly that dumping it is the single most important reform needed to attack dysfunction in Sacramento. But Democrats by now have managed to work themselves into a complete state of psychological paralysis about it.

Instead of aggreselephant-donkey-boxing-thumbsively fighting against the tyranny of the minority, Democrats act like the two-thirds is some unspeakable force of nature, an all-powerful totem before which all must bow down and worship in fear.

Underlying this passive posture are two crippling, if unspoken, assumptions: 1) that policy is somehow separate from politics and 2) that the only reality that matters is that unfolding in the hothouse halls, meeting rooms, chambers, restaurants and saloons of the cul de sac that is Sacramento.

Steinberg, in particular, appears so intent on playing the policy statesman that he seems to have forgotten he’s also a leader of a political party, with plenty of untapped resources available to make recalcitrant Republicans pay a price in their own districts for their stubbornness.

Bass, with her adoring gazes at Schwarzenegger, looks and acts like she’s fallen down the rabbit hole of Sacramento; having lost the perspective that there’s a whole big world outside, she fails to wield the fierce and formidable campaign style weapons at her disposal — money, research, troops and technology — in members’ districts around the state.

The bottom line for Democrats is that, unless and until the two-thirds rule gets rolled back, their last, best hope of prevailing is to start treating their political fights with Republicans as a kind of permanent campaign. Here are five tactics the Dems could use for starters:

1. Bury the petty feuds between the Assembly and Senate and among members. These are a key reason why Democrats never get their act together when they’ve got a Republican governor — at least since the Speaker of the Assembly has become a rotating position. Even when John Burton was President Pro Tem, the Assembly and Senate were constant rivals — a foolish and vain conflict that saps strength from what should be a vital majority party. Sure, term limits have made members crazy, so that everyone’s angling for the next position and looking over their shoulder. But unless the party functions as a power center, majorities in the Legislature aren’t worth a bucket of warm spit.

2. Craft a message. If the Democrats had a clear, consistent and collaborative message in the budget fight, they did a terrific job of keeping it secret. Someone in a position of authority – or a collaborative group — needs to step up and start convening conference calls that include key players – top legislative leadership, John Burton and state party operatives, key Sacramento consultants like Gale Kaufman and Jason Kinney, and maybe even representatives of the gubernatorial candidates – to discuss the news and hash out a simple and coherent message in anticipation or response, to be sounded by every player from every platform so that they start framing the debate and defining the issues.

3. Identify and exploit the weaknesses of individual Republican members. Take a lesson from the way Obama’s White House operates in going after political enemies, like Senator Jim DeMint, or the way the Democratic Congressional Campaign Committee attacks vulnerable GOP members in their districts.  Take a hint from Pete Stark, whose interactive map of stimulus spending could be used throughout California Assembly and Senate districts.

Democratic leaders need to put their forces on a war room footing that quickly and constantly spins off web and cable ads, robo calls, earned media opportunities and direct mail ads pointing out exactly what a GOP member’s “just say no” stance means for his district. Flood the zone with truth squads, protests and demonstrations at member’s offices, focusing tightly on the real world impacts to real people – teachers, cops, nurses, service employees, the sick and elderly – of the ideological recalcitrance of GOP assemblymen and senators.

4. Agree on a progressive tax strategy and stick with it. From day to day, the Democrats bounce around about the need for government spending in a recession, embracing a tobacco or liquor tax one day, sales tax reform the next, ending corporate loopholes on yet another. The net effect is to make them look craven and desperate to get their hands on any public money anyway they can, instead of having a coherent strategy of governance that is both progressive and practical, and that speaks to real people.

For starters, develop in depth and detail for the public the arguments for an oil severance tax – it truly is a scandal that California is the only oil-producing state without one – and stick with it instead of folding the first time anti-tax Republicans jump up and go “boo.”’ The tax cut, trickle down theory of government was soundly rejected by Americans in the last election, and Democrats need to stop living in fear that it’s still 1978.

5. Build stronger alliances with the netroots. The most consistent and smartest thinking and writing about progressive politics isn’t happening in Sacramento, but being churned out day after day on sites and by organizations like Calitics, Orange County Progressive, and the California Budget Project. Many Democratic members, just like Calbuzz, may find some of their stuff too lefty, but their reach into communities of interest of political activists makes them invaluable allies in spreading the message about progressive values and reaching critical mass in the battle to shape the political narrative that shapes public opinion.

Surely, professional political operatives in Sacramento can come up with a better list than ours. We’re just a couple of old hacks who’ve watched politics for 60 years or so, and advising partisans isn’t our job. But the next time we take a shot at the Democrats for their feckless and impotent behavior, don’t say we haven’t laid out some alternatives.

Swap Meet: Oil & Con Con Meet Gambling Cowboys

Saturday, July 18th, 2009

namlogoNew push for Con Con: Latest player to jump into the battle for a state constitutional convention is the New America Foundation, the influential non-partisan. D.C.-based think tank, which maintains a formidable intellectual presence in California.

The foundation, which is home to big brain journalists including Calbuzz contributor Mark Paul and Blockbuster Democracy blogger Joe Matthews, is sponsoring two community forums in Southern California over the weekend. On Friday, they also released a new research report recommending that convention delegates be average folks, rather than the collection of hacks, flacks and usual suspects who are no doubt lying in wait to hijack the process.

Author Steven Hill based the conclusion on evidence gleaned from case studies of the “deliberative democracy” movement, a host of ordinary people political groups that tackled projects ranging from the rebuild of the World Trade Center to the economy of Northeast Ohio and post-Katrina reconstruction in New Orleans:

“Some have wondered if average people are capable of the kind of in-depth understanding of complex issues that will be necessary for redesigning California. But the truth is, average Californians are the only ones who can lead our state out of the quagmire of special interests and partisanship that currently is paralyzing it. That’s because average Californians bring a special quality that too many incumbents and the political class in general do not have: a pragmatic desire to solve the state’s problems, regardless of ideology, partisanship or career self-interest…

“Participants often demonstrate a ready willingness to mix and match elements from differing political approaches – market-based, public sector, ‘conservative’ or ‘liberal’– as long as the result is a solution that will work for themselves and their communities.”

oil_platformOn-again off-again on-again off-again oil project on-again: Enviros around the state are scrambling yet again to block the controversial PXP oil drilling project off the Santa Barbara coast (a Calbuzz debate on the issue is here and here ), amid reports that approval for the offshore plan is part of a proposed framework in the closed door, Big Five budget negotiations.

“We heard it’s back in the budget and the governor is lobbying very aggressively for it,” said one key player in the long-running fight over the project. “They would put (the project) into a trailer bill.”

If approved, the PXP project would be penciled in for producing $1.8 billion in royalties over the next 14 years, including $100 million in the current fiscal year; foes of the plan, which was defeated earlier by the State Lands Commission but resurrected by Schwarzenegger in the budget fight, bitterly complain that California could reap much more – $2-4 billion annually – and with less risk to the environment, by enacting an oil severance tax on existing production.

California currently is the only one of 22 oil producing states that does not have such a tax., according to a drill down piece by LAT business columnist Michael Hiltzik who went deep into the weeds on the issue.

Environmental groups “started (Thursday) sending dozens of alerts to tens of thousands of coastal activists letting people know that Schwarzenegger’s Vampire was up and stumbling around yet again,” one coastal advocate told Calbuzz. “How many times do you have to kill something, anyway?”

Fox100

What happens in Vegas: Over at Fox and Hounds Daily our friend Joel Fox is trumpeting an editorial in the Las Vegas Review Journal that fiercely attacks suggestions the Prop. 13 be amended, and assails California for having high taxes and too much regulation of business.

As California teeters, Democrats are left to contemplate how this living laboratory of liberalism — with its smothering taxes, intrusive regulatory apparatus, generous social services and well-fed, heavily unionized public sector — could now find itself on the brink of collapse.

Rather than conclude the obvious — that decade after decade of high-tax, anti-business, anti-growth policymaking designed to sate an ever-expanding state is ultimately unsustainable — a handful of liberals have found their culprit: Proposition 13, a measure limiting property taxes passed by voters in 1978.

Not surprisingly, neither the editorialist nor Fox mentioned that Nevada closed its own multi-billion dollar deficit this year by raising taxes, that the state’s unemployment rate is higher than California’s or that the Silver State was ranked the #2 most dysfunctional government in the nation.

To his credit, Fox did acknowledge that “one of the reasons I’m reprinting the editorial here (is) because it quotes me.”

Golden Lone Star State: Perhaps the biggest humiliation for California to date is a takeout in The Economist that compares the Golden State unfavorably to Texas, ferhevvinsake. Noting that Chief Executive magazine has ranked California “the very worst state to do business,” compared to the top-of-list rating of Texas, the piece concludes that “Mr. Schwarzenegger’s lazy governorship could come to be seen not as the great missed opportunity but as the spur for reform.”

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