(Sacramento) – Assemblymember Sandré Swanson (D-Oakland) announced his co-authorship of a bill that would put California's oil tax laws in line with other oil-producing states, while bringing much needed fiscal assistance, nearly $1.2 billion, to the State's endangered education system.

"We are the only oil producing state that does not place a tax on oil taken from the ground or from our waters. Yet, there is little difference in the price of gas between California and elsewhere, which means that we are supporting the operations of these oil companies in those states. At the same time, this year's fiscal crisis threatens our education system, which is the foundation of our future, and what our children depend on. This tax will allow us to address both of these problems," stated Assemblymember Swanson.

AB9xxx will assess a 6% fee on producers that extract oil from the ground or water, who own or manage an oil well, or who own a royalty interest in oil production within the state. Additionally, the bill includes a windfall profits tax provision that would levy a 2% surtax on taxable income from oil extraction in excess of $10 million. The severance tax will not apply to oil wells that produce less than 10 barrels per day, unless the price of oil at the well head was more than $50 per barrel. The fee is less than the average compared to rates in other states, which range from 2% to 15%, in addition to other taxes imposed by those states on oil producers or purchasers. Among the 22 major oil producing states, California is the only state that does not levy a severance tax.

Revenues from the tax would be used exclusively to fund K-14 education in the state. Its primary purpose would be to mitigate teacher layoffs that would result from the Governor's proposed cuts to K-14 education. Addressing concerns over who would inevitably be paying the tax, Assemblymember Swanson stated, "This bill prevents oil companies from passing this tax on to consumers. It will empower the State Board of Equalization to monitor and investigate instances where producers or purchasers of oil have attempted to gouge consumers."

Expecting a vigorous challenge from the oil industry, and understanding the difficulty of passing a bill that requires a 2/3 majority, Assemblymember Swanson noted, "This bill is a moral challenge for those legislators who would oppose this action, and for oil companies to support education and its role in creating the workforce of the future. Given the looming shortage of workers in all industries, we cannot afford to cut education, which is the very engine of economic prosperity in our state. Schools need to be our top priority, and it is time for oil companies, who have enjoyed record profits in an industry that is seeing only increasing demand, to pay their fair share. Our children deserve no less."