Oil Companies and the Budget Deal

We’ve been focusing a lot here on Calitics in the last day or so on the losers in the recent budget deal. But who are the winners? Pretty high on that list would have to be Big Oil. They were able to convince Democrats to drop their demands for an oil severance tax, and were able to convince Democrats to agree to allow the first offshore oil drilling in 40 years to begin off the unspoiled coast of Santa Barbara County near Point Conception.

Every other oil-producing state in the union taxes the extraction of oil from its lands – including Texas and Wyoming. Even Sarah Palin raised the oil severance tax in Alaska to 25% in 2007. Instead, as Paul Hogarth pointed out, California is defining itself to the right of Sarah Palin by refusing to embrace such a tax.

The California Budget Project estimated a 9.9% oil severance tax would bring it at least $1 billion to state coffers. If oil prices rose again above $100/bbl then we could see $2 billion in revenue per year. Given the high likelihood of such increases, an oil severance tax would be a significant long-term boon to the state’s coffers, since oil companies can’t exactly shift production out of state, since oil is only going to become more valuable over time.

And that money could help prevent the most egregious human services cuts that were agreed to in the budget deal – the cuts to healthy families that will cost 500,000 children their health care coverage, the cuts to in home supportive services that people like Nori need to survive.

There are many possible responses to the budget deal. The Courage Campaign is asking our members to zero in on the oil severance tax and ask their legislators to vote “no” on a budget that does not include that tax. We will collect signatures to our letter and deliver it to every legislator in the Capitol ahead of the Thursday budget vote.

Californians are being asked to make a choice: give the oil companies a sweetheart deal unprecedented in the United States, or demand that oil companies pay their fair share and help prevent a humanitarian catastrophe that budget cuts will cause.

The Courage Campaign thinks the choice is clear. Let’s let make sure our legislators hear about that clear choice before the vote on Thursday.

Over the flip is the email we sent to our members, which includes the California Closed video produced by community organizers Marta Evry and Laura Velkei.

Dear Robert —

Are oil companies more important than children and the disabled? Our legislative leaders and the governor seem to think so.

Last night, Governor Arnold Schwarzenegger and the leaders of the state legislature announced they had reached a deal to close the state’s budget deficit. And it’s a horrific deal. They agreed to $15 billion in cuts that will cause 500,000 children to lose their health care and will cause thousands of disabled Californians to lose their in-home caregivers.

Too often we see these cuts as abstract — as mere numbers on a page. That’s why community organizers Marta Evry and Laura Velkei produced a heartbreaking video that shows the impact of these cuts. They call it “California Closed” and it is a powerful call to action on behalf of the Californians who will suffer the most if this deal is approved.

To add insult to injury, the budget deal benefits oil companies at the expense of children and the disabled. And despite widespread public support for an oil severance tax, the Governor and legislative leaders chose not to include such a tax as part of the budget deal. Instead they agreed to allow the first new offshore drilling off the California coast in 40 years.

The budget isn’t a done deal yet — legislators will vote on it Thursday. We have 48 hours to tell them to protect children and the disabled by passing a budget that makes oil companies pay their fair share in taxes. Please watch the “California Closed” video and then sign a letter that we will deliver to every legislator before the budget vote:


According to the nonpartisan California Budget Project, an oil severance tax of 9.9% could generate as much as $1 billion per year — without requiring any new drilling. That is enough to prevent the cuts to in-home supportive services, to children’s health care, and to Medi-Cal.

Last year, Chevron — the largest California corporation in terms of revenue — banked $24 billion in profits. Yet California is the only major oil-producing state that does not tax the extraction of oil from its lands. Even Sarah Palin’s Alaska has an oil severance tax.

Our legislators need to hear from you right now that you will not support any budget deal that does not include an oil severance tax to protect children and the disabled.

Please click here to watch the “California Closed” video, and sign the Courage Campaign letter to the legislature demanding an oil severance tax to stop the health care cuts. We will deliver your signatures to your legislators before they vote on the budget on Thursday:


It’s time progressives like you made your voice heard in Sacramento. Thank you for standing up for a more progressive and fair California.

Robert Cruickshank

Public Policy Director, Courage Campaign

7 thoughts on “Oil Companies and the Budget Deal”

  1. Pedro Nava (D) who is running for Attorney General..and his wife is running for his post.


    Capitol Office:

    State Capitol

    P.O. Box 942849

    Sacramento, CA 94249-0035

    Tel: (916) 319-2035

    Fax: (916) 319-2135

    District Offices:

    Santa Barbara County

    101 W. Anapamu Street

    Suite A

    Santa Barbara, CA 93101

    Tel: (805) 564-1649

    Fax: (805) 564-1651

    Ventura County

    201 E. Fourth Street

    Suite 209-A

    Oxnard, CA 93030

    Tel: (805) 483-9808

    Fax: (805) 483-8182

  2. over corrections cuts…from a memo sent about an hour ago  by Blakeslee to his caucus members:

    Just two hours ago I learned from staff that Senate democrats are concocting a radioactive corrections bill that includeds the worst of the worst _ sentencing commission and release of 27,000 prisoners, etc

    When I spoke with Dennis he was as surprised and upset as I was regarding what appears to be a serious breach of the agreement in the Big 5.

    I have called and personally told both Karen and Darrell that their [sic]will be no republican votes for any portion of the budget if they allow such a bill to be part of the package.

    They know how to play hardball…Dems?  Well, no need to answer.

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