Taxing Oil Profits Could Save Universities

Dear Editor,

California’s higher education system is at a breaking point.

Last month, almost 10,000 students, staff and faculty at University of California campuses on the first day of classes held a walkout in protest. The crisis is just as severe at our state universities and community colleges.

In order to close the gap caused by ongoing state budget cuts, the UC, CSU and community college systems have proposed additional fee increases up to 41 percent and cuts that would devastate academic programs and increase class sizes.

This one-two punch of higher costs and reduced academic programs couldn’t come at a more difficult time, as students face the worst job market in decades and are increasingly burdened by mounting debt.

It’s time to take action to save California’s higher education system. I have authored a bill to address this problem directly. If passed, my Assembly Bill 656 would raise up to $1 billion for the UC, CSU and community college system with a 9.9-percent tax on California oil.

Other oil-producing states levy an extraction tax on oil production — a process known as a “severance tax.” Texas, for instance, generates $400 million yearly for higher education through mineral and oil rights.

This is not some abstract proposal — every single oil-producing state in the nation already imposes an oil severance tax and our proposed 9.9 percent is considerably less than the 25-percent tax levied in Alaska. Last year alone, Exxon Mobil earned a $45.2 billion profit, the most ever by a publicly traded U.S. company. The year before was nearly as lucrative; Exxon profited $40.6 billion, Shell $31.3 billion, British Petroleum $20.8 billion and Chevron $18.7 billion.

AB 656 will redirect a fraction of these profits to where California needs it most: our higher education system. It has never been more important to make sure the Californian workforce is prepared with a quality education. A study by the Public Policy Institute of California found that at least 41 percent of workers will need a Bachelor’s degree to meet the state’s projected economic needs by the year 2025. But skyrocketing tuition and fee increases will put a quality college education out of reach for too many Californians.

Our state’s universities generate billions of dollars in economic activity and attract billions more in research dollars, money that fuels key industries like agriculture, energy and biotechnology. We simply can’t afford to let this economic engine sputter.

It will not be easy to take on big oil. It is a multibillion-dollar industry that will spend millions to preserve its tax loopholes. But we have hundreds of thousands of Californians ready to fight back to save education.

You can help our fight by joining the Facebook page “Fair Share for Fair Tuition” or e-mailing your local legislator to support AB 656 — the 9.9- percent severance tax on oil and gas to save California higher education.

—Alberto Torrico
Majority Leader, California State Assembly