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Billionaire to push state lawmakers for oil tax

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December 17, 2013 | 8 Comments

Tom Steyer

FILE -- In this Wednesday, Sept. 25, 2013 file photo, businessman Tom Steyer speaks during a meeting to announce the launch of a group called Virginians for Clean Government at Virginia Commonwealth University in Richmond, Va., Steyer, a billionaire environmentalist, says he will launch a campaign next year urging California lawmakers to approve taxes on companies that extract oil in the state. The major Democratic donor said Monday, Dec. 16, 2013 that he thinks it is ridiculous that California is the only oil-producing state that does not levy such a fee, which could generate billions of dollars a year. (AP Photo/Steve Helber)

SACRAMENTO— Billionaire environmentalist Tom Steyer said Monday that he will launch a campaign next year urging California lawmakers to approve taxes on companies that extract oil in the state.

Steyer, a major Democratic donor who also bankrolled last year’s Proposition 39 campaign, said he thinks is it ridiculous that California is the only oil-producing state that does not levy such a fee on oil pumped from private land, which could generate billions of dollars a year for the state budget.

Proposals for an oil tax have stalled repeatedly amid pressure from oil companies, which are major donors to lawmakers’ campaigns. But Steyer said he believes the current Legislature is more progressive and collaborative than in the past.

“I don’t understand why the politics are hard here,” he said in a telephone interview. “Who is going to stand up in the town square and say that we shouldn’t have a tax on this?”

Tupper Hall, a spokesman for the Western States Petroleum Association, which represents oil companies, said Steyer is wrong to compare California with other states that have such a tax. He said oil companies generate a lot of revenue through other fees, including $500 million a year in state royalties and billions of dollars annually in royalties paid to private landowners for oil extracted on their property.

Hall said an extraction tax would mean more imported oil, decreased investment in the state’s oil infrastructure and job losses.

“After understanding the implications of raising taxes on energy production, Californians have rejected all of those proposals and they will reject this one,” Hall said.

State Sen. Noreen Evans, D-Santa Rosa, already has pending legislation that would impose a 9.5 percent per-barrel tax on oil, but it stalled in a legislative committee this year.

Her spokeswoman, Teala Schaff, said Evans hopes to find more support for the bill in 2014. But she noted that the current makeup of the Legislature includes more moderate Democrats who are loathe to oppose the business community, which has opposed such efforts.

“We’re giving away our natural resources for free to companies that make billions of dollars a day in profits,” she said. “If the Legislature can’t get it done, then hopefully the people will.”

Steyer says he will seek to persuade lawmakers through public polling that he believes will show voters support increasing taxes on major oil producers, but it could be a hard sell in 2014, an election year. The hedge fund founder from San Francisco said he has “no idea” of Gov. Jerry Brown’s position on such legislation but cannot imagine the governor opposing it.

“It’s very hard for me to understand how the governor couldn’t be in favor of this,” Steyer said. “But having said this, he’s never said to me ‘Don’t worry, I’m behind this,’” he said.

A spokesman for Brown, Jim Evans, declined to comment on Steyer’s campaign.

The governor has been dogged at events lately by protesters who oppose his signing of a law that sets rules for the method of extracting oil and natural gas known as hydraulic fracturing, or fracking. Opponents had sought a ban or stringent regulations on the practice. But of eight bills introduced on the issue this year, only one was signed into law, and opponents say that one was watered-down.

Steyer had a high-profile win in 2012, when voters approved his Proposition 39 by a 60-40 margin. The initiative closed a provision in the tax code that had allowed multistate corporations to choose between two tax formulas, which had cost the state about $1 billion a year in lost tax revenue. His effort was supported by many California-based businesses.

Steyer spent about $27 million of his own money on that campaign. He said he has not set a budget for how much he is willing to spend on a public awareness campaign for the oil-extraction tax.

The Associated Press

The Associated Press

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Discussion | 8 comments

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  • The MisterDecember 17, 2013 - 6:59 am

    So a very rich man is going to use his money to get the government to take more of your money. You don't have a say in the matter. You are neither rich nor do you posses the violent power of the government. You only get skrewed. Of course they've taken away your guns so you are no real threat to anyone... just a pool of money and labor they can continue to take from.

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  • Mike KirchubelDecember 17, 2013 - 8:40 am

    What a distorted, corporatist view of reality. The residents of Alaska don't pay any state income tax AND they get a check from the government every year because the oil companies pay a royalty on every barrel taken from the ground there. Why should we not charge them for taking our oil in California? It is the oil companies who want to take your money from you, so they don't have to. Open your eyes to something other than Fox Propaganda. Also, why should we give them an oil depletion allowance when it is our oil that is being depleted? The wealthy, as always, have plenty to say in this matter. It is the working man, as usual, who cannot pay to be heard.

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  • DanielDecember 17, 2013 - 9:11 am

    Kirchy too bad for us that we don't have a governor like the one that enacted the oil refunds in Alaska whom also got rod of government waste but her name became mud because she so affectivly bashed your corporatist Messiah who pretends that he's a progressive.

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  • B. ThiemerDecember 17, 2013 - 12:38 pm

    the oil is not "our" oil.. it belongs to the landowner associated with the mineral rights, and the company who contracted to pump the oil out of the ground. Additionally, it amazes me to hear people complain that it is unfair for an oil company to make 4% profit on a barrel of oil, but completely fair and reasonable for the government to collect 9.5% tax on the same barrel.

    Reply | Report abusive comment
  • Mike KirchubelDecember 17, 2013 - 1:04 pm

    Well, continue to be amazed.

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  • Mr. PracticalDecember 17, 2013 - 6:21 pm

    Mike, the severance tax is a terrible idea. California is the only state that charges property tax on the mineral deposits in the ground. How much worse do you want California's economy to be?

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  • rlw895December 18, 2013 - 1:11 am

    Mr.P: I was not aware of that, so I don't know the details. But generally, I don't have a problem with a tax system that has the effect of having California oil exploited after other sources. We are using oil too fast, especially our native oil.

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  • rlw895December 17, 2013 - 2:17 pm

    If we're serious about eliminating the state's structural deficit without raising income taxes, this tax is a no-brainer. It's good to have a champion to advace it.

    Reply | Report abusive comment
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