Key Democrats Plan New Push for Oil Severance Tax


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.

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There are 4 comments for this post

  1. avatar jskdn says:

    Democrats proposing to increase taxes; who would have guessed?

    “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.”

    And of course the two politically ambitious Democrats on the three-member commission, Garamendi and Chiang, would never make such a decision based on how it might affect their political futures.

  2. avatar Coastwatcher says:

    Bravo to Garamendi and Nava. They have it right. Off shore oil drilling is a dirty business from start to finish and oil spills are not a thing of the past. We should not be endangering our coast. The oil companies reap billions of dollars in profits off the oil that the people own and only here in California do we let them have it for free. Let’s protect our coast and use the revenue from the inland drilling to help our budget.

  3. avatar Beep says:

    If we can’t get this tax passed, which EVERY OTHER OIL-PRODUCING STATE HAS–even those well-known hotbeds of liberalism like Alaska and Texas–then you know what? It’s time to DUMP that 2/3 requirement to pass any damn tax. Some of us are tired of being held hostage by an extremely vocal minority who use negotiation tactics of the kindergarten playground (“if I don’t get everything totally my way I’m gonna take my toys and go home! MOMMY!!!”. “Democrats just want to raise taxes” ? Oh really. While some people cling to the sinking ship of partisanship-till-we-die, the entire state is falling apart. This isn’t about Democrats and Republicans. This is about Californians, and what’s fair for all of US and for the children now who will come after us. We sane people need and want a clean environment, an educated population able to create and maintain a 21st-century economy, and a state we can be proud of. The smoke from the nearby wildfire reminds me that we also like police and fire protection here in Responsible Adult Land. Btw, for the clueless, we are one of the largest economies in the WORLD. We do not even need to starve our poor, our sick, our frail elderly, our children. We don’t need to cut anybody off from health care or food or the help they need to function with a disability. Do that kind of crap for what? To kiss up to some oil companies? For what reason? Maybe they contribute to political campaigns? I don’t know. Since I’m not a politician, I don’t care. Pay us fairly for our oil or leave it where it is. This state already gives more to Washington than it gets back (and yet our budget-cutters are always happy to risk the money due to us in federal funds; thanks guys)…we don’t need to be subsidizing oil companies, too. Republicans, Democrats, Independents, Greens, Space Aliens, whatever–aren’t you tired of being totally ripped off? The Passionate Moderate has spoken here! Seriously…no more rip-offs! Oil companies pay your fair share and stop whining. The rest of you, stop being shills for them; it’s unbecoming.

    • avatar Eureka says:

      Way to go “Beep”!

      It’s time to stop cowtowing to the oil companies who have had a free ride in CA for too long. Pay your fair share, you big oil bullies! And members of the Assembly…stop being wimps and listen to your conscience: Stop stepping on our students, the poor, the elderly and our beautiful CA coastline and make the oil companies come clean. Holy cow, the oil companies make in a day what they will be taxed in a year.

      Oh, and by the way…I’m a Republican!

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