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Calif. Ballot Measure Would Create Oil Tax

Money Generated Would Fund Education

Audio

Aired 5/9/11

A proposed California ballot measure would create a tax on oil and use the money for education.

Initiative supporters have just received approval from California Secretary of State Debra Bowen to circulate petitions.

The proposed measure would put a 15 percent tax on each barrel of oil extracted in California.

The money raised would benefit K-12 and higher education.

One of the three initiative supporters, Paul Garver, lives in San Diego.

Garver said California is the only major oil producing state that doesn't tax oil when it's removed from the ground.

"California produces about 600,000 barrels a day, which is just below Alaska's rate," said Garver. "We're the third largest producer in the country. If we tax at that rate we'll raise, depending on the price of oil, between $2 and $4 billion a year."

Garver said 30 percent of the oil tax revenue would go to K-12 education, 48 percent to community colleges and 11 percent each to the University of California and California State University.

He said the 15 percent tax would not be passed on to consumers by oil companies.

"And the reason is that there's no economic mechanism to pass this tax on to consumers other than collusion or fraud," said Garver. "But we have a provision in the initiative that if it appears that they have tried to do that illegally then that money can be recovered and returned to consumers."

Garver said there is also a provision prohibiting producers from passing the tax on to refiners, gasoline stations, or consumers.

Another provision prevents the state legislature from loaning money from the oil tax revenues to the General Fund.

The initiative also prohibits reduction of regular education funding based on the additional revenues from the tax.

A summary by the Legislative Analyst and Director of Finance estimates if the measure becomes law, the new charge on oil extraction would net education about $2 billion to $3 billion per year.

Supporters of the proposed initiative have to collect signatures of 504,760 registered voters -- the number equal to 5 percent of the total votes cast for governor in the 2010 gubernatorial election -- in order to qualify it for the ballot.

The deadline is September 30, 2011.

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