BILL ANALYSIS
AB 656
Page 1
ASSEMBLY THIRD READING
AB 656 (Torrico)
As Amended January 25, 2010
Majority vote
REVENUE & TAXATION 5-2 HIGHER EDUCATION 5-3
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|Ayes:|Beall, Coto, Ma, |Ayes:|Portantino, Block, Fong, |
| |Portantino, Fong | |Ma, Ruskin |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Nestande |Nays:|Conway, Cook, Galgiani |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|De Leon, Ammiano, | | |
| |Bradford, Charles | | |
| |Calderon, Coto, Davis, | | |
| |Fuentes, Hall, John A. | | |
| |Perez, Skinner, Solorio, | | |
| |Torlakson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Harkey, Miller, | | |
| |Nielsen, Audra Strickland | | |
| | | | |
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SUMMARY : Requires the Board of Equalization (BOE) to prepare an
annual report on the estimated revenue that would be raised by the
imposition of a 12.5% oil and natural gas severance tax.
Specifically, this bill :
1)Requires BOE to report, on or before November 1 of each year, the
estimated revenue that would be raised if an oil and natural gas
severance tax were imposed upon producers at the rate of 12.5% per
barrel.
2)Requires BOE to provide this report to the Legislature, the
Regents of the University of California (UC), the Trustees of the
California State University (CSU), and the Board of Governors of
the California Community Colleges (CCC).
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3)Provides that the report shall include a summary of the estimated
amount of revenues that would be distributed to institutions of
higher education, as follows:
a) 50% to the CSU;
b) 25% to the UC; and,
c) 25% to the CCC.
EXISTING LAW :
1)Requires oil producers to pay the Department of Conservation a fee
of $0.0880312 per barrel of oil produced to fund the department's
regulatory programs. Oil taken from federal offshore waters is
exempt.
2)Authorizes a 1.0% ad valorem property tax, to be imposed by
counties, on the full cash value of property where the value of
the property includes underlying gas and mineral rights and, with
respect to oil in the ground, "proved reserves."
3)Imposes an Oil Spill Prevention and Administration Fee of up to
$0.05 per barrel of oil on persons owning crude oil when it is
received at a marine terminal from within the state. This fee is
collected by the marine terminal operator. The fee is also
imposed on operators of pipelines transporting oil into the state
across, under, or through marine waters.
4)Imposes a sales or use tax on the gross receipts from retail sales
of motor vehicle fuel and diesel fuel.
5)Imposes an excise tax of $0.18 per gallon on the removal of motor
vehicle fuel or diesel fuel at the refinery or terminal rack, upon
entry into the state, and upon sale to an unlicensed person.
FISCAL EFFECT : Committee staff estimate that this bill would not
impact the state's General Fund.
COMMENTS :
1)As heard in the Assembly Committee on Revenue and Taxation, this
bill imposed a 12.5% oil and gas severance tax on producers to
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fund classroom education at the University of California, the
California State University and the California Community Colleges.
The amendments taken in the Assembly Appropriations Committee
delete those provisions and, instead, require BOE to provide an
annual report on the amount of revenues that would be generated
through the imposition of such a tax. The report would also
include a summary of the estimated revenues that would be
distributed to California's public institutions of higher
education. BOE would be required to provide this report on or
before November 1 of each year, with no end date specified.
2)Technical amendment: This bill currently calls for a report on
the amount of revenue that would be raised "if oil and natural gas
severance tax were imposed . . . ." Committee staff recommend
inserting the word "an" between "if" and "oil".
3)Prior legislation: Committee staff note that prior legislative
sessions have addressed the issue of imposing a special tax on
businesses. Specifically:
a) ABx3 9 (Nunez), introduced in the 2007-08 legislative
session, would have imposed a 6% oil severance tax and a 2%
surtax on that portion of taxable income or net income,
respectively, in excess of $10 million, of taxpayers engaged in
the petroleum industry. AB x3 9 failed passage on the Assembly
Floor.
b) AB 2442 (Klehs), introduced in the 2005-06 legislative
session, would have imposed a surtax at the rate of 2% on net
income in excess of $10,000,000 that is apportioned to
California and arises from business activities in the petroleum
industry. AB 2442 failed passage on the Assembly Floor.
5) AB 673 (Klehs), introduced in the 2005-06 legislative
session, would have imposed a 2.5% tax on the windfall profits
of petroleum producers and refiners. AB 673 failed passage on
the Assembly Floor.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916) 319-2098
FN: 0003630