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Posted 1:18 pm
May 18, 2011

Oil tax would help fund higher education

Oil is often associated with exploding geysers of black gold in the hands of a wealthy few, but with Assembly Bill 1326, a shower of revenue may begin to fall into the funding of the higher education system.

Approval of AB 1326 would provide a 12.5 percent oil and natural extraction severance tax to fund the California State University, University of California and community college systems but the bill is currently facing divided support.

“That oil is California’s and the money that is being made should go into the hands of Californians and that is what Furutani intends with this bill,” said a representative from the office of assemblyman Warren Furutani. “Oil companies need to pay their fair share and these funds will go directly to students.”

The tax is based on the amount per barrel extracted from California and is similar to a sales tax but the taxing will not affect the cost of gas at the pump, according to the bill.

According to Furutani’s office, the bill proposes that the funds generated from the tax would be directed toward academic programs and student support services.

Lucie Camara, a finance major, believes Furutani’s bill initiative is a great idea.

“I haven’t heard about it but I think it’s about time we start seeing some money invested in students,” Camara said. “I think the government puts too much money on other things like prisons and all the budget cuts seem to affect students and education.”

Although the proposed bill would seem to bring a sustainable form of revenue to higher education, the CSU system doesn’t approve of the bill as written and has adopted a “support if amended” position.

According to Erik Fallis, spokesman for the CSU Chancellor’s Office, the CSU has taken this stance because they found the wording of the bill to be overly ambiguous.

“Our main challenge is that we do want more funding but we don’t see protections for our current funding and statutorily we want writing that will clarify and make this funding distribute effectively,” Fallis said. “We are suggesting amendments to make it better.”

Fallis said the CSU has identified three weaknesses in the language of the bill: the creating of a new bureaucracy to administer the funds, no specific amounts to the distribution, and limited protections that ensures the money supplements and do not retract current state general funds.

As it stands, AB 1326 would create a new bureaucratic board to distribute and disburse these funds generated.

“It’s difficult to understand why we need another legislative body when we already have bodies like the Controller to disburse the revenues,” Fallis said. “Besides Californians see government as having too much bureaucracy.”

According the CSU Budgetary Office, the current general fund for students is $2.77 billion and, according to Fallis, the amount is predicted to be reduced to $2.29 billion over the next five years.

“With the current language of the bill, this fund would be like the lottery,” Fallis said. “It didn’t prove to be a sustainable form of funding.”

Ian Moreno, undecided major, said he heard about the bill from friends attending other universities and echoes sentiments of disbelief.

“I mean, it sounds great and all but like the saying goes, ‘Show me the money. Show me the money.’”

Lucien Artman, a communications major, said that although the bill is noble, the proposed bill seems like an attempt to tap into the oil market and profits.

“It seems like everyone is just rushing in to cash into the oil industry and to be honest I think this will be just another failed effort to fund our education,” Artman said. “I don’t hear any specifics just saying something will fund education is going to work.”

AB 1326 is modeled after Alaskan and Texan oil taxation laws.

As it stands now, oil and gas companies in California do not get taxed on revenue earned and the bill is currently sitting in the assembly Committee of Revenue and Taxation awaiting amendments.

  • Brutus

    How is a tax on oil sustainable revenue? Oil’s not infinite.