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California Proposition 87, Severance Tax on Oil Producers to Fund Alternative Energy Programs Initiative (2006)
| California Proposition 87 | |
|---|---|
 | |
| Election date November 7, 2006 | |
| Topic Energy and Taxes | |
Status Defeated | |
| Type Amendment & Statute | Origin Citizens |
California Proposition 87 was on the ballot as a combined initiated constitutional amendment and state statute in California on November 7, 2006. It was defeated.
A "yes" vote supported a severance tax on oil producers in California based on the gross value of each barrel of oil with funds dedicated to research and production of alternative energy. |
A "no" vote opposed a severance tax on oil producers in California based on the gross value of each barrel of oil with funds dedicated to research and production of alternative energy. |
Election results
|
California Proposition 87 |
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|---|---|---|---|---|
| Result | Votes | Percentage | ||
| Yes | 3,861,217 | 45.44% | ||
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4,635,265 | 54.56% | ||
Measure design
Proposition 87 would have imposed a severance tax, effective in January 2007, on oil production in California and dedicated the revenues to research and production of alternative energy. The severance tax rate structure would have been as follows:
- 1.5% of the gross value of oil from $10 to $25 per barrel;
- 3.0% of the gross value of oil from $25.01 to $40 per barrel;
- 4.5% of the gross value of oil from $40.01 to $60 per barrel; and
- 6.0% of the gross value of oil from $60.01 per barrel and above.
Text of measure
Ballot title
The ballot title for Proposition 87 was as follows:
| “ | Alternative Energy. Research, Production, Incentives. Tax on California Oil Producers. Initiative Constitutional Amendment and Statute. | ” |
Ballot summary
The ballot summary for this measure was:
| “ |
• Establishes $4 billion program with goal to reduce petroleum consumption by 25%, with research and production incentives for alternative energy, alternative energy vehicles, energy efficient technologies, and for education and training. • Funded by tax of 1.5% to 6% (depending on oil price per barrel) on producers of oil extracted in California. Prohibits producers from passing tax to consumers. • Program administered by new California Energy Alternatives Program Authority. • Prohibits changing tax while indebtedness remains. • Revenue excluded from appropriation limits and minimum education funding (Proposition 98) calculations. | ” |
Full Text
The full text of this measure is available here.
Fiscal impact statement
- See also: Fiscal impact statement
The fiscal estimate provided by the California Legislative Analyst's Office said:[1]
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Support
Yes on 87 led the campaign in support of Proposition 87.
Supporters
- Laura Keegan Boudreau, CEO, American Lung Association of California[1]
- Winston Hickox, former Secretary, California Environmental Protection Agency[1]
- Jamie Court, president, Foundation for Taxpayer and Consumer Rights[1]
- Dr. Mario Molina, Nobel Prize in Chemistry, University of California, San Diego[1]
- Tim Carmichael, president, Coalition for Clean Air[1]
Official arguments
The official voter guide arguments in favor of Proposition 87 were signed by Laura Keegan Boudreau, chief executive officer of American Lung Association of California; Winston Hickox, former secretary, California Environmental Protection Agency; and Jamie Court, president of the Foundation for Taxpayer and Consumer Rights:[1]
| “ |
YES ON 87: MAKE OIL COMPANIES PAY THEIR FAIR SHARE—FOR CLEANER ENERGY. Had enough of oil companies charging outrageous prices and making obscene profits? Had enough polluted air, asthma, lung disease, and cancer? Had enough of oil companies funding opposition to Cleaner, Cheaper Energy? Enough is enough. It’s time to make oil companies pay their fair share so we can use cheaper alternative fuels and reduce air pollution that causes lung disease and cancer. VOTING YES ON PROPOSITION 87 WILL MAKE OIL COMPANIES PAY THEIR FAIR SHARE. In Louisiana, Alaska, and even Texas, oil companies pay billions in oil drilling fees, but they pay almost nothing in California. California takes in more revenue from hunting and fishing licenses than it does from oil drilling fees. Under Prop. 87, the oil companies will finally pay us the same level of fees they pay in other states. They can afford it. The oil companies opposing this initiative made $78 billion in profits last year. Their profits are so high that EXXON gave its CEO Lee Raymond a $400 million retirement payout. Enough is enough. PROP. 87: NO COST TO CONSUMERS. OIL COMPANIES PAY. California’s Attorney General has confirmed that Prop. 87 makes it illegal for oil companies to raise gas prices to pass along the cost to us. If they do, they’ll break the law and could be prosecuted. The U.S. Supreme Court has already ruled that states can prohibit oil companies from passing fees like this on to consumers. Just look at the other states that have oil drilling fees. They all pay less for gas than California. That’s why oil companies are spending millions to defeat Prop. 87: because they know it’s illegal to pass the cost on to us. PROP. 87: CLEANER ENERGY AND CLEANER AIR. Prop. 87 makes oil companies pay for cleaner energy. It provides for cash rebates to consumers who buy cleaner, alternative fuel vehicles and incentives for more renewable energy like solar and wind power. It will create thousands of new jobs and economic growth. It will reduce our dependence on oil from Saudi Arabia and Iraq—which provide 47% of California’s imported oil. Voting YES on Prop. 87 will reduce air pollution in California. Pollution from cars and trucks is making us sick. Every year, cars put tons of lung-damaging smog and soot into the air that send children to the hospital and cause asthma attacks. That’s why the Coalition for Clean Air and California doctors and nurses ALL SUPPORT Proposition 87. PROP. 87: NO NEW BUREAUCRACY. Prop. 87 uses an existing state agency and requires strict enforcement and accountability through independent audits, public hearings, and annual progress reports. Nobel-prize-winning scientists, California environmental and consumer groups, educators, labor and agriculture groups all agree. It’s time we take control of our future. For Cleaner Air—For Alternative Energy Choices—For Less Dependence on Foreign Oil . . . Finally, Fairness. MAKE OIL COMPANIES PAY THEIR FAIR SHARE. VOTE YES ON 87. FOR CLEANER ENERGY. www.YESon87.com[2] |
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Donors
Campaign spending on Proposition 87 set a record, with a total of $154.3 million coming from both sides.[3] The great majority of the funds spent to promote Proposition 87 came from one individual, Stephen Bing, who contributed $49.5 million.[4]
Opposition
No on 87 led the campaign in opposition to Proposition 87.
Opponents
- Larry McCarthy, president, California Taxpayers Association[1]
- Daniel Cunningham, president, California Small Business Alliance[1]
- Marian Bergeson, past president, California School Boards Association[1]
- Kevin R. Nida, president, California State Firefighters’ Association[1]
- Ray Holdsworth, past chair, California Chamber of Commerce[1]
- Allan Zaremberg, president, Californians Against Higher Taxes[1]
Official arguments
The official voter guide arguments opposing Proposition 87 were signed by Larry McCarthy, president of the California Taxpayers Association; Daniel Cunningham, president of the California Small Business Alliance; and Marian Bergeson, past president of the California School Boards Association:[1]
| “ | Aren't gas prices high enough already? Do we really want to increase oil taxes by another $4 billion?
We all agree we need to advance alternative energy. But, Proposition 87 is not the way to get there. Increasing California oil taxes by $4 BILLION to fund a new state bureaucracy—that isn’t even required to produce results—is a recipe for waste, not progress. It’s also the road to more problems . . . HIGHER TAXES ON DOMESTIC OIL = MORE DEPENDENCE ON FOREIGN OIL. Economists report that taxing California oil production will reduce in-state oil production and increase our dependence on foreign oil. Oil from the Middle East and other countries costs more to get here and costs more to refine once here. HIGHER OIL TAXES, HIGHER GAS PRICES. Prop. 87’s sponsors claim it won’t increase gas prices. Are voters supposed to believe a $4 BILLION tax increase on California oil won’t impact gas prices at the pump? PROP. 87 CREATES A NEW STATE BUREAUCRACY WITH 50 POLITICAL APPOINTEES. It lets them spend taxes outside the normal checks and balances that govern other state agencies, outside the state budget review process, and exempt from important laws and taxpayer safeguards that apply to other agencies. PROP. 87 LETS THE NEW BUREAUCRACY KEEP SPENDING EVEN IF THEY’RE NOT PRODUCING RESULTS. It lets the political appointees tax and spend, year after year after year, even if they’re making absolutely no progress reducing oil consumption or advancing alternative energy use. PROP. 87 ROBS SCHOOLS OF THEIR FAIR SHARE OF NEW REVENUES. One of the most important protections our schools have is a constitutional guarantee that a portion of new state tax revenues be spent in the classroom. But, Prop. 87 excludes itself from that requirement. One of California’s leading education finance experts and the former Secretary of Education reports: 'At a time when California school funding is already below the national average, Prop. 87 could deny schools their fair share of up to $1.9 billion in new revenues over the next 10 years.' PROP. 87 WOULD REDUCE TAX REVENUES USED FOR EDUCATION, PUBLIC SAFETY, HEALTH CARE, AND TRANSPORTATION NEEDS. Prop. 87 would reduce general fund and property tax revenues. Read the Legislative Analyst’s report in your voter pamphlet. HIGHER GAS PRICES HURT FAMILIES, SMALL BUSINESSES, AND SENIORS. Everyone bears the cost of high gas prices. The last thing we need is a ballot proposition that further drives up oil prices. EVERYONE AGREES WE NEED TO ADVANCE ALTERNATIVE ENERGY, BUT PROP. 87 IS NOT THE WAY TO GET THERE. 'Gasoline prices in California are high enough already. Proposition 87 would just add insult to injury. This $4 billion oil tax would result in even higher gas prices at the pump. We recommend drivers vote: NO on 87.' —Thomas V. McKernan, President and CEO, Automobile Club of Southern California Join more than 150 organizations, taxpayer groups, consumers, California businesses, labor, parents, educators, seniors, and public safety officials . . . VOTE NO on 87. It’s a recipe for waste, not progress. |
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Path to the ballot
- See also: California signature requirements
In California, the number of signatures required for an initiated constitutional amendment is equal to 8 percent of the votes cast at the preceding gubernatorial election. For initiated amendments filed in 2006, at least 598,105 valid signatures were required.
Kimball Petition Management was paid $2,382,280.00 for its work collecting the required signatures.[5]
See also
External links
- Official California Voter Pamphlet information about Proposition 87
- Full text Proposition 87
- Guide to Proposition 87 from the California Voter Foundation
- Summary of donors to and against 87 from Cal-Access
- Donors for and against Proposition 87 from Follow The Money
- Official declaration of the November 7, 2006 ballot proposition election results
Footnotes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 University of California Hastings, "Voter Guide," accessed March 21, 2021
- ↑ 2.0 2.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Gay and Lesbian Times, "Calif. initiative campaigns cost $227 million," February 12, 2009
- ↑ Follow the Money, Californians for Clean Alternative Energy
- ↑ Cal-Access, "Expenditure Details, Yes on 87 Committee"
