You have to give politicians in Sacramento credit. They don't waste time celebrating their victories before starting their next plan of attack. In last November's election, California voters chose not to repeal Senate Bill 1. SB1 is what Sacramento insiders know as the Road Repair and Accountability Act of 2017. Most taxpayers simply refer to SB1 as "the gas tax."
A state senator from Orange County, Josh Newman, was recalled over his aye vote on SB1, so even though it wasn't repealed, there was plenty of angst about the tax increase amongst voters.
As a reminder, SB1 raised several taxes and fees. Most importantly to California drivers, it raised the gas tax 12 cents a gallon, reset the price-based excise tax to a fixed amount, raised our vehicle registration fees and placed a new fee on zero emission cars. New fees and taxes will now be adjusted annually based on the Consumer Price Index. That means they will go up every year. Motorists will see the reset on the price-based excise tax go into effect this summer. Voters had an opportunity to repeal this tax, but failed to do so.
So just as you are thinking that because they had won the war, they would never think about taxing our gas again, state Sen. Bob Wieckowski, a bankruptcy lawyer by trade, introduces Senate Bill 246. SB246 would impose a 10 percent oil and natural gas severance tax, which equates to an almost $900 million tax increase on Californians. It appears those tax dollars would flow directly into the state’s general fund to be used for anything the majority of legislators would like.
In January, Gov. Gavin Newsom presented his draft 2019-2020 budget of $209 billion, which includes $144 billion in general fund expenditures. The year before, California’s general fund budget was $138 billion. In short, the state of California is operating with more revenue than ever. With the general fund currently boasting a $15 billion surplus, you really have to wonder why they feel the need to keep coming up with new ways to tax us.
Currently Californians pay the second highest gas tax in the nation, just behind Pennsylvania. When the price-based excise tax reset goes into effect in July of this year, we might just move into first place.
Besides hitting the taxpayer directly in the wallet, an oil severance tax will cost California billions of dollars in lost jobs and economic growth. SB246 would only punish California business activity, not out-of-state or foreign oil production, which seems to be counterintuitive. Punish California companies while rewarding oil companies elsewhere? With Californians using most if not all oil produced in our state, shouldn’t we want to continue to be oil-independent and not have to rely on other sources?
When an oil severance tax increase has been attempted in the past, the nonpartisan Legislative Analyst’s Office warned of unintended consequences. Increasing it would drop property values and local taxes to the tune of “tens of millions of dollars per year” affecting local governments and school districts in the oil-producing areas of California. Oil and natural gas companies already pay tens of billions of dollars in federal, state and local taxes. Any increase is going to be passed down to the end user; that would be the taxpayers of California.
There have been multiple oil severance tax proposals in California over the years and they have all been defeated. We need to make sure that SB246 suffers the same fate. We do not need an additional gas tax increase. We are taxed enough.
This article appeared in the Orange County Register.