Democrats draw lines for summer budget fight

Assembly Democrats moved quickly to force a vote on a bill that would have levied new taxes on oil companies to raise money for education; however, as expected, the bill was killed on the Assembly floor without any Republican support.

The bill, AB3X9 by Assembly Speaker Fabian Núñez, was dismissed as a political stunt by Republicans, who say Democrats are more interested in embarrassing Assembly Republicans than actually solving the state’s budget problems. “It’s bad political theater masquerading as responsible tax policy,” said Assemblyman Chuck DeVore, RIrvine, the ranking Republican on the Assembly Revenue and Taxation Committee.  “It’s actually bad fiscal and energy policy.”

“This is about responsibility. This is about protecting education over and above these oil companies that, by my standards, have been doing quite well,” Núñez said during a news conference at a Sacramento elementary school.

Núñez championed his proposal in a Sacramento Bee op-ed Wednesday, where he blasted Republicans who have pledged not to raise taxes this year.

“Maybe we should take every ‘no tax’ pledge signed by Republican elected officials and staple them to the layoff notices,” wrote Núñez. “It is incredible that a party that once promoted itself as a champion of personal responsibility has been reduced to looking the other way when yacht owners hide their boats out of state to dodge taxes or when oil companies stiff the people of California with one hand and gouge us with the other.

“The time for knee-jerk, no-tax rhetoric is over.”

Though the bill was defeated Wednesday, Núñez had made his point. Passing the bill was never really what this was about. It was about drawing battle lines in the budget fight this summer. Democrats chose this week to hold the vote because it is the week that many schoolteachers are receiving layoff notices from their districts in the wake of threatened budget cuts from the governor to public education.

Democrats have called for increased revenues through fees and taxes to help mitigate the need for cuts.

The bill would have created a new 2 percent oil tax for any oil company that earns more than $10 million in net income. It would also impose a new 6 percent “oil severance tax” based on the gross value of each barrel of oil produced in the state.

The bill would generate about $1.2 billion, according to the speaker’s office.

DeVore said the proposal would “devastate oil production in California if it’s passed,” and would lead to an increase in California’s gas prices, despite language in the bill that specifically prohibits oil companies from passing the cost of the new tax on to consumers.

The bill language was introduced Monday and was fast-tracked to the floor by the speaker’s office. It was rushed to a hearing in Assembly Revenue and Taxation on Wednesday, and moved to the floor later in the afternoon.

According to the bill language, all of the money raised by the bill “shall be deposited in the General Fund and allocated exclusively for the purpose of funding grades K through 14 education.”

The governor’s press office said the governor has not seen the details of the proposal but did not support the concept. “The governor doesn’t believe we can resolve our chronic budget problems by raising taxes, which is why we need budget reform,” said Schwarzenegger spokesman Aaron McLear.

“This really is a drill,” said DeVore. “I wouldn’t want to insult the Democrats’ intelligence that they actually believe in the policies they’ve advocated. Clearly, these policies would devastate California’s domestic oil production.”

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