 "Photo: Justin Kenward")
Just recently Gov. Schwarzenegger proposed several policies to divert funding back into the public education system. He announced his support for an amendment that would not allow the state to spend more than 7 percent of the state’s budget on prisons and no less than 10 percent on higher education.
In recent years the state has spent a larger percentage of the budget on prisons than on education. Investment in educated citizens, and not the growth of prisons, will be required to find the innovative solutions our state will need to move forward.
The Governor’s proposal would lock state legislators into another difficult budget dilemma. Above all else, the amendment would contain a clause which would allow the governor to discount the amendment in case of a fiscal emergency.
There’s another policy that should seriously be considered instead. State Assemblyman Alberto Torrico (D-20) believes his oil severance tax bill, AB 656, is the solution.
California is the third largest oil producing state in the nation that does not levy a tax on oil production.
The 12.5 percent tax on oil production would direct all revenue into the higher education fund. It has been projected that the bill could bring in $1.5 billion annually.
If passed, the bill would create an oversight committee called the “California Higher Education Endowment Corporation.” The board would regulate the amount of money that goes to each of the three higher education systems in California. As of the current proposal, only one student representative would sit on the board.
Opponents of the oil severance tax believe that it would cost the state jobs in smaller oil producing communities. But the tax would only be levied upon the largest oil producers.
For those who say that a tax on oil produced in the state would mean higher gas prices, the bill includes provisions which prohibit costs from being passed onto consumers. Those oil producing companies suspected of passing on the tax would be subject to investigation.
Currently the bill has only made it past the state Assembly’s Revenue and Taxation Committee and is now in suspension until negotiations such as lowering the taxation rate from 12.5 to 6 or 7 percent are resolved.
Although not the entire solution to the state’s education funding problem, it could prove to be a valuable start at accumulating much needed revenue.
Update: On Jan. 21 the portion of the bill that included an oil severance tax was removed. Another amendment was introduced to the bill that would require the state Board of Equalization to report annually how much revenue could be generated if a tax like this did exist.
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