“Climate change” is useful for political activism because, unlike “global warming,” it can’t be tested.

Fortunately, even more liberal news outlets are checking the political contentions of Tom Steyer, the billionaire California hedge-fund investor and anti-climate change activist. NextGen is his political activism group. The San Jose Mercury New reported:

The Washington Post’s Fact Checker blog in January, however, awarded its dreaded “four Pinocchios” rating to a NextGen ad citing Chinese investment in Canada’s tar sands and claiming the controversial Keystone XL pipeline would produce oil only for other countries. The Chinese investment is small, the Post found, and NextGen took an oil executive’s words out of context to imply that no oil carried by the pipeline will remain in the U.S. 

The ad “relies on speculation, not facts, to make insinuations and assertions not justified by the reality,” the Post said. 

Last October, PolitiFact — a renowned fact-checking project run by the Tampa Bay Times — gave its “pants on fire” rating to a NextGen ad claiming Virginia Attorney General Ken Cuccinelli, then running for governor, wanted to “eliminate all forms of birth control.” Cuccinelli has repeatedly said he has no interest in restricting contraception, PolitiFact noted. 

This month, PolitiFact gave “half-true” ratings to a pair of NextGen ads attacking Florida Gov. Rick Scott’s ties to energy companies and polluters. FactCheck.org, a project of the University of Pennsylvania’s Annenberg Public Policy Center, said it didn’t dispute the statement of critics that one of the Florida ads was “total fiction,” though the GOP response had “glaring factual problems” too. 

And PolitiFact this month deemed “false” a NextGen ad accusing Iowa U.S. Senate candidate Joni Ernst of having signed a pledge that “protects tax breaks for companies that ship jobs overseas.” The pledge was a broad vow to oppose all tax hikes.

I would add that, if Steyer is so concerned about shipping jobs overseas, then why did he increase Californians’ taxes $1 billion in 2012 with his Proposition 39?

And why is he trying to raise oil taxes in California, an expense that inevitably would be passed on to drivers through higher taxes at the pump?

And why is he backing the new tax of up to 20 cents a gallon to be imposed on Californians next January from the state’s Cap and Trade program? The higher tax especially would hurt poor commuters. Which is why Assemblyman Henry Perea of Fresno and other Democrats with poor constituents tried to cancel the tax hike. Perea charged the money would be grabbed “out of the pockets of hard working Californians who drive to work or school and make necessary trips to the grocery store or doctor’s office.”

Steyer’s stances are useful because they show what Californians’ positions will be under extreme  environmental rules: higher taxes breaking their budgets and seats in the back of the green bus.

Are Californians ready for another tax increase?

That’s what California hedge-fund manager Tom Steyer sought to find out in his “People’s Poll” on whether voters would support an added oil extraction tax in California. The tax would be 9.9 percent on a barrel of oil. It would raise up to $2 billion a year.

Steyer is not new to pushing tax increases. In 2012, voters approved his Proposition 39, which increased taxes $1 billion for corporations headquartered in other states.

Steyer’s political advocacy organization, NextGen Climate, retained the Benenson Strategy Group to conduct a poll on the prospects for voter approval of a statewide oil-pumping tax.  The poll was conducted of 800 likely voters in California.

The major findings: 64 percent to 75 percent of likely voters supported a new oil extraction tax.

Loaded Questions

But the poll was based on questions such as:

Q17.  Suppose you knew California is the only one of 22 oil producing states where oil companies extract oil for free.  Given this, would you say you strongly support charging oil companies an extraction fee in California, somewhat support, somewhat oppose, or strongly oppose it? “

Results:

The above is what is called a loaded question.  Loaded questions contain a presumption that the attacked group is guilty.

Q17 presumes that oil companies are guilty of extracting oil in California for free, which is clearly not the case.  It is the “truth” — as in a half truth — that California does not have an oil extraction tax.  However, it has corporate, sales and individual income taxes on oil that generate about the same revenues as oil extraction taxes from other states.

In 2008, William Hamm, who once ran the non-partisan Legislative Analyst’s Office in California, and colleague Jose Alberro conducted a study, “Comparison of Oil Tax Burdens in the Ten Largest Oil Producing States.”  This study documented that California’s oil taxes are about average.  However, if oil-extraction surtaxes would be charged in California, the state’s combined oil taxes would be 40 percent higher than the combined oil taxes of any other state.

Age Bias

The Steyer poll respondents also were over-represented by those more than 65 years of age compared to the California population age profile of the U.S. Census:

Younger adult Californians were under-surveyed by 17.6 percentage points. And older Californians were over-sampled by 16.6 percentage points compared to U.S. Census age profile data.

This is an important slant because older respondents who drive less or not at all would be expected to be less concerned about increasing oil and gasoline prices.

Un-Representative Sample

Steyer’s poll also subtly over-surveyed Democrats, Independent and No Party Preference voters over Republicans.

Republicans only comprised 25 percent of the respondents to the poll, but 28.6 percent of the registered voters, according to the California Secretary of State.

Independent/No Party Preference voters made up 36 percent of those polled, but were only 21 percent of registered voters.

No opposition

Another problem with the poll is that it was conducted outside the normal political environment of an election. In an actual election, oil companies and such anti-tax groups as the Howard Jarvis Taxpayers Association would be expected to run adds pointing out that an oil tax increase inevitably would be be paid by drivers through higher prices at the pump — at a time when prices already have been going up.

Any oil tax increase would be put on the Nov. 2016 ballot. Which means it’s also hard to see what the political climate would be in a presidential election year. For example, although the Democratic nominee for president almost certainly would win in California, if a recession occurs, Democratic voter turnout might be dampened, hurting support for a tax increase.

Earlier this year, Gov. Jerry Brown, running for his own re-election this year, rejected the Steyer tax. He said in January, “I don’t think this is the year for new taxes. When I went up and down the state campaigning for Proposition 30, I said it was temporary and it is going to be temporary. I just think we need everything we can to live within our means before going back again to try and get more taxes.” 

Voters approved Prop. 30 in 2012, which increased taxes $7 billion.

The Senate Education Committee last week approved a $2 billion tax hike on California’s oil industry that critics say would drive up energy costs and push businesses out of state. Proponents of Senate Bill 1017 tout the additional revenue it will provide for higher education, parks and social services.

“I’m authoring this bill because California is the only major oil producer in the world which does not collect taxes on oil production,” Sen. Noreen Evans, D-Santa Rosa, told the committee on April 24. “As a result, California is losing out on billions of dollars in revenue, amounting to massive subsidies for big oil companies. And as result, our children are suffering.

“I’m authoring the bill because California can no longer afford to leave revenues on the table when the exploitation of California resources by oil companies is reaping huge profits for them. And this is a time when we are forcing our children into debt to pay for their own education. And it is indefensible for California to continue subsidizing the oil companies.”

Taxes on top of taxes

The bill imposes a 9.5 percent tax on oil and gas extracted in California.

Evans said that the total taxation on the oil industry in California was $4.20 per barrel, versus $14.33 in Texas, according to 2011 data from the Franchise Tax Board and the Board of Equalization.

The current global market price of crude oil is just under $100 a barrel.

She argued that the tax will not be passed on to consumers because “oil prices fluctuate according to the global market. The fact is that this bill will not affect prices at the pump.”

Evans acknowledged that Californians recently agreed to tax themselves extra through Proposition 30, but pointed out the tax ends in 2017.

“It is not a permanent solution to California’s revenue problem,” she said of Prop. 30. “One of the solutions is in this bill. Enact an oil severance tax on large oil companies to help strengthen our economy. Oil companies had a record profit of $137 billion in 2011. And it is time for them to pay their fair share.”

However, opponents of the tax point out that oil drillers already are paying sales, property, business income and ad valorem taxes. And such taxes are among the highest in the country. So when all those taxes are added up, today the state is in the middle of the pack for oil taxation among the country’s 10 largest oil-producing states, according to a 2008 study. A 9.9 percent oil severance tax would shoot California to the top of the oil taxation list.

Education cuts

The bill lays out the need for increased funding for higher education in California:

• “Since the budget cuts enacted in 2010, over 32,000 teachers and faculty have been laid off. This has resulted in cuts in classes being offered, an increase in the ratio of students to teachers, and a reduced quality of education in the state.
• “Moreover, University of California student fees have almost doubled in the last five years alone, while California State University student tuition fees have risen 80 percent, and California Community College student tuition fees have risen 130 percent.
• “As a result, over 750,000 students are no longer seeking to attain an advanced degree in California.”

Jefferson McGee, representing the Sacramento chapter of the Alliance of Californians for Community Empowerment, spoke against Big Oil.

“Taxing  Big Oil is the right thing to do,” he said. “California is the fourth largest oil-producing state, and the only major oil producer to not tax Big Oil for extraction. For some reason Big Oil has been given a pass here. Especially frustrating is the fact that California is a major profit center for Big Oil. They made nearly $20 billion in profit in California last year alone.

“The oil industry with their immense profits should be required to pay for our natural resources and also reinvest in the state that allows them to make so much profit. We know the oil lobby in California is strong. And they aren’t afraid to spend money to keep their profits high and their taxes as low as possible. I would like to urge all of the senators to stand with their constituents who desperately need the $2 billion in revenue this tax would provide.”

Several students asked the committee to support the bill.

“For many middle-class students such as myself, the CSU is really the only financially viable way for us to obtain the degree that many of the jobs in our state’s workforce will require us to have,” said Shawn Kiernan, a senior at CSU Fresno.

Opponents of the bill agreed with the need for more education funding. But they said it shouldn’t come at the expense of the oil industry.

Kern County would be hard hit

Opponents also pointed out the tax would come at the expense of one area, Kern County, which produces more than 70 percent of California’s oil and more than 60 percent of its natural gas, according to Kern County Supervisor David Couch. He said 12,000 people are employed in the oil industry in his county.

“Not only is Kern County’s oil and natural gas important to California, it is the lifeblood of Kern County and our economy,” said Couch. “The nearly 10 percent severance tax would cost thousands of jobs in California.

“Besides the loss of good paying jobs, the tax proposed in SB1017 would depress the value of the petroleum properties by approximately $2.7 billion. Meaning county government and local schools would suffer reduced property taxes each year of about $27 million. We do not think it’s fair to ask the people in Kern County to shoulder the burden of financing these statewide institutions that benefit all Californians.

“We are not opposed to more funding for education. We are opposed to the mechanism. It’s very similar to the so-called ‘sin taxes’ on alcohol and tobacco. Except that in Kern County our sin is apparently producing the oil and gas on which 96 percent of California vehicles depend.”

The tax would definitely impact California’s oil industry, said Eloy Garcia, representing the Western States Petroleum Association.

“The idea that we can add a 10 percent tax and all things will remain the same – the level of production, the level of investment in California – is fundamentally wrong,” he said. “There are right now in the United States, domestically, a number of opportunities that are available to oil producers.”

Oil schizophrenia

Garcia suggested that state legislators may be conflicted over oil.

“We have a bit of schizophrenia over oil production in California,” he said. “We don’t want it, but we want the revenue. You can’t have both. That is our basic concern with this approach is we want more money, but we are not looking at the regulatory structure, the cost of producing oil in California. Those all have to be considered together.

“The oil industry pays the state … to the tune of about $500 million a year coming to the General Fund in the way of tide and oil revenues. Where the oil producers don’t own the mineral rights, they pay royalties for those mineral rights. Those are substantial payments, substantial investment from the oil industry in California.”

John Kabateck, executive director of the National Federation of Independent Business/California, told the committee that the oil tax would add “to the uncertainty on Main Street. Small business owners … right now are facing not only the highest gas taxes but the highest sales and income taxes and most egregious regulations in the state and lawsuit abuse. So uncertainty is understandable. A new tax right now, this is not just hitting the Big Oil community. This is absolutely passed along to small businesses.

“Right now, what small businesses need is job creation. There are 2 million people already out of jobs. Many of our small business owners are big supporters of employment. But they can’t do that if they are inhibited with a tax burden time after time after time, when we are the leader in tax burden in California.”

Tax sends wrong message

Dorothy Rothrock, representing the California Manufacturers and Technology Association, said the oil tax sends the wrong message to business.

“We’ve seen manufacturing investment and employment decline severely over the past several decades,” she said. “Part of the reason is high energy cost, high tax rates. This new tax is unnecessary. We need to send the signal to investors out there that California is the place you want to come and put your money in the ground. We want to rebuild the industrial base of the state. This bill goes in the wrong direction.”

The committee discussion was dominated by Sen. Bob Huff, R-Diamond Bar.

“It’s a noble issue to find a dedicated source for education,” he said. “But this is also deemed by the Legislative Analyst as a volatile source of revenue. We already have a volatile source of revenue, which is the basis of our whole budget – we tax the top 1 percent [of income earners] very high. We tax other things that are volatile, capital gains. So it gives us that boom-bust that makes it very difficult to feed a government program one year and then have to cut it back the next. This would exacerbate that problem.”

He was referring to a 2011 LAO analysis, which found, “A wide range of revenues, however, is possible due to the wide fluctuation in oil and gas prices.”

Huff continued, “I believe higher education is something that we need to figure, ‘Is this a priority? Are we going to fund it at a higher level than we are now?’ And if the answer is yes, then … we work on growing jobs, we work on creating revenues in ways that creates a growing job base, growing revenue base, rather than punishing a single industry and driving oil production out of state.”

Democrats on the education committee supported the bill’s cash infusion for higher education, voting 5-3 to approve SB1017. Sen. Cathleen Galgiana, D-Stockton, was the only Democrat to join Huff and Sen. Mark Wyland, R-Escondido, in opposition.

The oil severance tax bill has become a legislative perennial over the past six years. Previous incarnations have either not made it out of committees, failed passage in the Assembly or been vetoed.

SB1017, if it makes it through the Legislature this year, could also wind up on the chopping block if Gov. Jerry Brown follows through on his response to a question about the oil severance tax at a Jan. 9 press conference.

“I don’t think this is the year for new taxes,” he said. “I went up and down the state campaigning for Proposition 30. I said it was temporary. It is going to be temporary. And I just think we ought to do everything we can to learn to live within our means before going back again and trying to get more taxes.”

Brown is running for re-election and the June primary is a month away.

SB1017 next goes to the Senate Governance and Finance Committee.