Neel Kashkari: Now isn’t the time to cut taxes

GOP gubernatorial candidate Neel Kashkari’s top priority isn’t cutting taxes, he told the San Jose State University College Republicans on Thursday night.

They’re too high, he agreed, but he called for first getting the state’s money’s worth from the taxes it does collect to foster new jobs and better education. Once the economy is strong again, he said, it’ll be time to reform the tax code to lower the overall taxation level.

“To be candid with you, I don’t think we start there; I think we start by putting people back to work,” he told about 20 students who’d gathered to hear him speak.

Kashkari & SJSU College Republicans, photo by Josh Richman

Because Kashkari’s speech occurred on our print deadline and due to limited space in the paper, here are a few other tidbits that didn’t make it into today’s story:

He’s “not comfortable with legalizing marijuana. … I’ve never smoked pot in my life,” he said. “But I also don’t think it makes sense to lock people up, to ruin their lives, to waste millions of dollars for a small amount of drugs,” he added, noting there must be a better approach than the “war on drugs” that has disproportionately hurt minorities.

Kashkari again called for opening the Monterey Shale to fracking for shale oil, saying it’ll be a key part of the job boom California desperately needs. The nation’s highest rents aren’t in San Francisco or New York, he noted, but actually in a small North Dakota town at the epicenter of that state’s fracking boom.

A true climate-change response must be national or international in order to have any effect, he said, and a robust state economy will bring more tax revenues that can be spent in part on basic research into clean energy sources and other climate-change solutions.

“I love our natural beauty, we have to protect the environment, but I believe we need to find the right balance,” he said.

Kashkari & Barr, photo by Josh RichmanKashkari got into a back-and-forth with Cheryl Barr, 22, an industrial-design student who disagreed with his environmental positions.

Barr after the meeting said Kashkari generally “seems like a decent guy,” and she likes that he has an engineering background – he earned bachelor’s and master’s degrees in mechanical engineering and worked briefly as an aerospace engineer, before earning his M.B.A. and entering the financial sector. But his campaign mantra of “‘jobs and education’ is kind of vague,” she said, and she believes his support of fracking is misguided.

“There actually is room to create jobs that can help the environment at the same time,” she said.


Proposal for oil severance tax rises anew

From the Legislature, to an unsuccessful effort toward a ballot measure, and to the Legislature again: The oil-severance tax is back.

State Sen. Noreen Evans, D-Santa Rosa, rolled out her SB 1017 on Wednesday with a rally at California State University, Sacramento. Flanked by student leaders and California Tax Reform Association executive director Lenny Goldberg, Evans said the tax is estimated to raise about $2 billion per year.

“California is realizing an economic recovery but as both the State Auditor and California Budget Project have concluded, without new revenues the state remains on unstable financial footing,” Evans said. “California remains the only oil-producing state in the nation that does not impose an oil extraction tax. Meanwhile, our debts grow, our population increases, and our services are strained while new revenues from our own natural resources earn $331 million a day for big oil companies. Not taxing oil extraction is simply fiscally unsound.”

SB 1017 would impose a 9.5 percent severance tax on the extraction of oil from ground or water within California’s jurisdiction. Half the revenue would be distributed into an endowment and split three ways among the University of California, California State University and California Community College systems, while health and human services would get 25 percent and state parks would get 25 percent.

The idea has been kicking around here for many years, and this isn’t even Evans’ first bite at the apple: She carried SB 241 just last year, but it never made it out of the Senate Appropriations Committee.

A UC-Berkeley-based student group called Californians for Responsible Economic Development began circulating petitions for an oil-extraction-tax ballot measure last April; when they missed their signature-gathering deadline in September, they started anew with a revised measure. But in November, the group changed its name to Students’ Voice Now and announced it would partner with lawmakers to push for a bill instead.

“Tuition levels are vulnerable to a fluctuating economy,” said Harrison “Jack” Tibbetts, a UC Berkeley senior and author of the California Modernization and Economic Development Act. “The endowment avoids this reality by growing during a booming economy and protecting students and their families during the bust. Many other states who tax oil extraction use this same model and have a flourishing education system.”

But Gov. Jerry Brown has pledged not to raise or create any taxes without voter approval, and so isn’t likely to break his promise and embrace this bill, especially as he seeks re-election this year. Anti-tax groups quickly noted this amid their own opposition.

“Governor Brown has been very clear: now is the time for fiscal restraint and government efficiency,” said Beth Miller, spokeswoman for Californians Against Higher Taxes. “But Senator Evans clearly isn’t listening. Instead she is focused on raising taxes on hard-working Californians and creating a huge new, unaccountable government bureaucracy.

SB 1017 promotes a tax Brown already said he doesn’t support, and for which voters have no appetite, Miller said. “Just two years ago, voters approved more than $6 billion in higher taxes and earlier this year the governor announced the state had a $4 billion budget surplus. Voters want Sacramento politicians to hold the line on taxes and work to make government work better and smarter – not create more government and taxes.”


Students to push Legislature for oil-extraction tax

Its proposed measure having failed to get enough signatures to qualify for the ballot, a student-led group calling for California to implement an oil-extraction tax will try its fortunes with the Legislature again.

Californians for Responsible Economic Development will change its name to Students’ Voice Now, and will soon announce a partnership with two state senators to get a bill or legislatively referred initiative passed in the Legislature next year, spokesman Kevin Singer said.

“The framework of the bill is expected to include an endowment for education, but also may include subsidies for families and businesses to switch to cleaner forms of energy, a rollback of the gas tax, and/or immediate revenue for the specific purpose of decreasing college tuition across California,” Singer wrote in an email.

Singer said that starting in January, as part of pushing for the bill, they’ll keep networking across California’s college campuses and “continue to build relationships with other interest groups, PACs, and legislators who believe that whether oil is drilled or fracked from our soil, Big Oil needs to pay its fair share.”

California is the only oil-producing state that doesn’t have a specific oil-extraction tax, and the proponents estimated the tax contemplated by their now-dead proposed ballot measure would’ve raised $1.5 billion to $2 billion per year.

But any such legislation probably faces a tough road ahead in the Legislature. State Sen. Noreen Evans, D-Santa Rosa, this year carried SB 241 to establish an oil-extraction tax, but the bill never made it out of the Senate Appropriations Committee.

Gov. Jerry Brown has pledged not to raise or create any taxes without voter approval, and so might push hard against any efforts to create this tax by legislation alone. And he probably won’t want a legislatively directed tax hike on the same ballot in which he’s (presumably) running for re-election in 2014.


Oil-extraction tax measure dies, but will return

A student-led campaign to put an oil-extraction tax ballot measure before California voters has failed – and is starting all over again with renewed vigor.

Monday was the signature-gathering deadline for the “California Modernization and Economic Development Act,” a measure conceived at UC-Berkeley that would’ve imposed a 9.5 percent tax on oil and natural gas extracted in the state. Petition circulation began April 25, but the proponents couldn’t hit their 504,760-signature mark.

But Californians for Responsible Economic Development, the student-led group that drafted the initiative, plans to resubmit a revised measure.

California oil wells“This summer has been busy for the CMED team,” said Aaron Thule, the campaign’s grassroots coordinator. “After a lot of hard work, we have built a signature gathering coalition for fall and winter that will be ready to activate and qualify this initiative come November.”

The tax would’ve raised an estimated $1.5 billion to $2 billion per year. In its first decade, 60 percent of its revenue would’ve been split equally among K-12 education, community colleges, the California State University system and the University of California system; 22 percent would’ve gone to clean-energy projects and research; 15 percent would’ve gone to counties for infrastructure and public health and safety services; and 3 percent would’ve gone to state parks. After the first decade, 80 percent would’ve gone to education, 15 percent to counties and 5 percent to state parks.

The revised initiative will have a sliding scale tax of 2 percent to 8 percent, which the proponents say will protect small business owners and jobs while still bringing in about $1 billion per year.

The revised initiative also will change the revenue allocation: 50 percent would be put in a special 30-year endowment fund for education, which after three years would start paying out equally to K-12, community colleges, CSU and UC. The proponents predict that after 30 years of collecting interest, it would bring in as much as $3.5 billion per year for education.

Another 25 percent would provide families and businesses with subsidies for switching to cleaner, cheaper energy, and the final 25 percent would be put toward rolling back the gas tax increase enacted last July, to make gas more affordable for working-class Californians, the proponents say.

Working to qualify the measure by early spring will be the University of California Student Association, groups at San Francisco State University, Sonoma State University, CSU Bakersfield and several community colleges. California College Democrats and California Young Democrats, both of which have endorsed an extraction tax for education and clean energy, are also lending support.

“It’s hard to believe that California is the only state that practically gives away our energy – especially when, as a state, our schools and colleges continue to struggle and we have yet to provide adequate funding to meet our own renewable energy standards,” College Democrats President Erik Taylor said.

The UCSA, representing hundreds of thousands of UC students, plans to organize across several campuses. “Affordability and funding are critical issues at the UC and Prop 30 simply is not the solution in itself that we need,” UCSA President Kareem Aref. “Our campaigns for this year are designed to ensure a stable and long term funding stream for the UC.”


NorCal Tea Party leads federal suit against IRS

The NorCal Tea Party is the lead plaintiff in a class-action federal lawsuit filed today in Cincinnati against the Internal Revenue Service, seeking damages for what they call “illegal and harassing behavior in the handling and processing of their applications for nonprofit status.”

NorCal Tea PartyThe NorCal Tea Party, based in the Placer County city of Colfax, is an umbrella group to local chapters across the Golden State’s northern half. Helping it file this lawsuit is Citizens for Self-Governance, a Texas-based group founded and led by Grass Valley attorney Mark Meckler, a co-founder and former national coordinator for Tea Party Patriots.

Meckler and NorCal Tea Party President Ginny Rapini are scheduled to hold a news conference tomorrow, Tuesday, May 21, at the National Press Club in Washington, D.C.

“We stand shoulder to shoulder with all those known and unknown who have been abused by a federal government run amok,” Meckler said. “Instead of just playing defense, it is time for the citizens to go on offense. We are, after all, ‘We the People.’ And when the federal government runs amok, it is up to us reign it in. Neither party in Congress can be relied upon to satisfactorily resolve this issue. They created the IRS, fund the IRS, and oversee the IRS. All of this abuse happened on their watch.”

The IRS’ apparent targeting of conservative groups for special scrutiny about tax-exempt status is dogging the White House and setting the Capitol’s corridors ablaze with anger.

The lawsuit says the NorCal Tea Party “came together to exercise their right to free expression.”

“However, under pain of denial of tax-exempt status, the IRS and its agents singled out groups like NorCal Tea Party Patriots for intensive and intrusive scrutiny, probing their members’ associates, speech, activities, and beliefs,” the complaint says. “NorCal and its members suffered years of delay and expense while awaiting the exemption and spending valuable time and money answering the IRS’s questions. The result was a muffling and muzzling of free expression.”

The suit seeks damages for violation of the Privacy Act and of the NorCal Tea Party members’ constitutional rights, “including damages for loss of benefit of tax exempt status, cost of complying with burdensome requests, loss of donors and membership fees, damages for impairment of constitutionally protected rights, punitive damages, litigation costs, and reasonable attorney’s fees.”


Oil severance tax measure to start circulating

A proposed ballot measure to enact an oil severance tax, with most of the revenue spent on education, has received its official title and summary and is about to start circulating for petition signatures.

California oil wellsConceived by UC-Berkeley students, the California Modernization and Economic Development Act places a 9.5 percent tax on oil and gas extracted from California; supporters say it would bring about $2 billion of new revenue per year. Of that, about $1.2 billion would be allocated in four equal parts towards K-12 education, California Community Colleges, California State University and the University of California.

Another $400 million or so would be used to provide businesses with subsidies for switching to cleaner, cheaper forms of energy, and about $300 million would go to county governments for infrastructure repair, public works projects, and funding public services.

Californians for Responsible Economic Development, the group behind the measure, has 150 days to collect 505,000 signatures in order to qualify it for the 2014 ballot. The group says it’ll do both grassroots organizing and fundraising for paid signature gathering.

California over recent decades has seen many legislative bills and ballot measures – either proposed, or unsuccessful with voters – to impose such a tax. More than 30 states have oil and gas severance taxes, but opponents say such a tax could reduce California’s oil production, costing jobs.

Former U.S. Labor Secretary Robert Reich, now a Cal professor, endorsed the effort in February, saying using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The measure last week won support from state Senator Noreen Evans, D-Santa Rosa, whose SB 241 would impose an oil severance tax to fund education and parks in California. She said she supports any effort to let “California to collect on these vast and irreplaceable natural resource revenues that should fund one of the most important core services of government – education. It’s past time California ends the oil industry’s free ride and finally sets a solid revenue stream towards funding government’s education obligations.”

CMED campaign manager Jack Tibbets, a junior at Cal, said his staff will be working closely with Evans’ office. “Should the Senate fail to vote and pass SB 241, our campaign will work with public officials, donors, interest groups and students to produce an extraction tax for the 2014 ballot.”

Here’s the official title and summary issued today by the state Attorney General’s office:

Imposes 9.5% tax on value of oil and natural gas extracted in California. During first ten years, allocates revenues: 60% to education for classroom instruction (split equally between UC, CSU, community colleges, and K-12 schools); 22% to clean energy projects and research; 15% to counties for infrastructure and public health and safety services; 3% to state parks. Thereafter, allocates 80% to education, 15% to counties, and 5% to state parks. Prohibits passing tax on to consumers through higher fuel prices.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Increased state revenues from a new oil and gas severance tax of $1.5 billion to $2 billion per year initially (which could either grow or decline over time), to be spent on public schools, colleges, and universities; clean energy research and development; local infrastructure projects; and state parks. (13-0002.)