By Shannon Murphy
A bill to increase oil taxes in California to fund education has been introduced in the state Senate.
The bill would first create the California Higher Education Endowment Corporation, which would oversee distribution of the funds as outlined by the bill. The bill would then levy a 9.5 percent severance tax on oil companies operating in California.
In all 50 percent of the funds raised would go to the University of California, California State University and California Community College systems, 25 percent would go to health and human services and 25 percent to the state parks.
Opposition to the bill includes oil and natural gas companies as well as financial lobbying entities.
John Kabateck, executive director of the National Federation of Independent Business, issued a statement saying “NFIB/CA and our nearly 24,000 members are strongly opposed to SB 1017, which will upset our fragile economic recovery and further jeopardize jobs by imposing yet another new tax on business.
“With a 9.5 percent tax on each barrel of oil, the measure will guarantee that California will have the highest combined oil taxes in the nation.”
However, the statement does not appear to be accurate. Of the 36 states that produce oil, California is the only one that doesn’t have an oil severance tax. Most oil states have a tax between 4 and 10 percent with Alaska being the exception with a 25 percent severance tax.
According to a study conducted in April 2012 by the Institute for the Study of Societal Issues at the University of California, Berkeley, for every dollar the state invests in higher education, the state receives a $4.50 return on its investment. While oil companies claim the bill may place a financial burden on them the figures indicate it is a sound investment in California’s future.
LBCC President Eloy Oakley said, “I agree the state should increase its investment in higher education and especially Community Colleges. SB1017 identifies a new potential source of funds, but there are many ways in which the state can direct funds to our college. I would welcome any additional funds the state provides that enable us to improve outcomes for our students in order to prepare them for California’s future workforce demands.”
California faces a serious shortfall in its supply of college-educated workers, according to the Public Policy Institute of California. In a report the institute said, “Over the past few decades, public higher education institutions have faced disproportionate cuts in state funding.” The institute said if current trends hold, California will fall 1 million educated workers short of economic demand by 2025. The shortage will drive companies to seek educated workers out of state and leave too few jobs.