Severance tax debate in California

The California Senate debated legislation to increase their severance tax as it pertains to oil last week. The Democratic-led chamber failed to post the two-thirds vote necessary to increase the severance tax on oil to 6%, the proceeds of which would've been distributed to education. The bill would've also tacked on a 2% tax on "windfall profits."

California has been debating ways to fill the budget gap in that state, and without some sort of tax increase, they'll be forced to cut school funding. “Everyone knows they’re trying to paint Republicans as the bad guys sticking up for the evil oil companies,” said Assemblyman Alan Nakanishi (R), “while the Democrats ride up on their white horses” to rescue the schoolchildren. The vote fell along party lines by a vote of 45 for and 30 against after a spirited three-hour debate with 42 speeches by lawmakers. Here's a related editorial that was published in the Sacramento Bee.

Elsewhere, Gov. Bill Ritter (D-Colorado) is attempting to put and initiative on the ballot to increase the severance tax in that state. A columnist with the Denver Post states that the goal is to create a package that would raise the severance tax and spend the extra money on higher education, local management of the impacts of oil and gas development, and perhaps a little land preservation.