The Santa Barbara County Board of Supervisors is contemplating adding an initiative to the 2012 ballot to tax crude-oil production, which officials say could generate more than $3 million in annual revenue for county coffers.
With a 3-2 vote on Nov. 8, county supervisors approved moving forward with the proposed severance tax. The wording of the measure would have to be finalized by July 5 to make it on the November ballot.
Assistant to the CEO Dennis Bozanich, who presented the proposal, told supervisors the tax could rake in $1.8 million to $3.3 million annually, depending on the taxation method. Oil extraction could be taxed on each well, by the barrel, or by the value of the oil, or a mix of the three, he said. A report by county staff used figures ranging from 40 to 60 cents per barrel as a starting point for discussion.
The California Independent Petroleum Association (CIPA) and the Santa Barbara Taxpayers’ Association staunchly oppose the measure. The Taxpayers’ Association claims there isn’t enough support among county voters for the tax, as surveys it’s commissioned showed only 45 percent of those polled support a severance tax with the revenue going to the county’s General Fund (about 41 percent opposed).
Any tax on oil production would have to be passed by a simple majority of voters if the money goes into the General Fund. Other uses for the revenue would have to be approved by a two-thirds majority.
Supervisors Salud Carbajal, Janet Wolf, and Doreen Farr voted in favor of going ahead with the proposal. Supervisors Joni Gray and Steve Lavagnino, both representing the North County, voted against it.
In explaining his vote, Lavagnino expressed concern over the result of the Taxpayers’ Association’s poll, which also indicated votes would fall short of the two-thirds threshold for other tax revenue uses, including education.
This article appears in Nov 17-24, 2011.