How Big Oil won California


Count these among the things that will get more difficult after the midterm elections: passing a federal energy bill, being openly gay in the military, and governing California.

It's already hard enough. This is the state that has been pronounced “ungovernable” almost since its inception, and has been confirmed so in recent years by Forbes, the Economist, the New York Times and even Hendrik Hertzberg in the New Yorker. But thanks to California’s ballot initiative free-for-all, it just got worse.

The reason, as many a state legislature too well knows, is that governing a state actually requires money. And voters two weeks ago declined every measure that that might have squeezed a tiny bit of revenue from their recession-scalded hands.

Some of this is understandable: Who wants to pay an extra $18 in vehicle license fees just to keep rangers in their kiosks at state parks, as Proposition 21 would have done? (It would also have helped keep some of those parks open and paid for repairs of historic buildings, but whatever.)

And tax and regulate cannabis, as Prop 19 proposed? It’s already de facto legal in California, thanks to medical marijuana (the result of another ballot initiative, in 1996), and it’s tax free! (And think of all those doctors who’d be out of work, the ones who renew your prescription for $250 a year and a sob story about your anxiety.)

But Proposition 26 is the one that really has me shuffling around the house, muttering “you people!”

The measure, which 53 percent of voters checked yes on, reclassifies certain regulatory fees as taxes, which means that under California state law, only a two-thirds majority of lawmakers or voters can raise them. (Voters did reduce the majority needed to pass a state budget by passing Proposition 25, which also threatens legislators with salary freezes if they don’t pass that budget on time.)

As Margot Roosevelt points out in Sunday's Los Angeles Times, Prop 26 “is aimed at multibillion-dollar statewide issues such as a per-barrel severance fee on oil and a cap-and-trade system for greenhouse gases.”

California oil pump image courtesy Flickr user Chris Streeter

Litter fees on cigarettes (San Francisco slaps smokers with one) and alcohol taxes that pay for education and cops would also be vulnerable to Prop 26’s hamstringing. It might even make it hard to ban disposable anything: The American Chemistry Council , Roosevelt reports, says “banning plastic grocery sacks and imposing a 10-cent fee on paper bags falls under the voting requirements of Proposition 26.” Our only ammunition on that front might be dirty looks at the grocery store.

Legal scholars are wringing their hands over whether the measure will trim the sails of California’s landmark greenhouse gas law, AB 32, which voters heroically protected by voting down Proposition 23. Jonathan Zasloff of the University of California at Berkeley Law blog says it won’t: The law “has no effect on the broad grant of authority to the California Air Resources Board to implement, enforce, and fulfill the purposes of AB 32,” he writes.

Mary Nichols, the head of California’s Air Resources Board agrees; the Natural Resources Defense Council’s Kristin Eberhard quotes Nichols on her blog saying “Prop 26 does not impair the scoping plan adopted in 2008 or any regulations developed under that plan.“

But that may be wishful thinking, posturing or just plain denial of the awful truth. The short answer to whether Prop 26 matters more than Prop 23 has to be yes, otherwise why would Chevron, Shell, Conoco Phillips and Exxon Mobile have all reserved their big bucks to sell Prop 26, while starving Prop 23 of funds?

Chevron, Roosevelt reported before the election, “contributed $3.9 million, the single largest donation by a company, to an $18.3-million joint campaign fund to push Proposition 26 and combat Proposition 25.” Prop 23 seems like just a decoy when you look at those numbers. And it can’t be just because they fear California – the only oil-producing state without a severance tax – will impose a tax on oil. In the mood they’re in, the people of California -- who evidently don’t believe in actually funding the state government that so perennially disappoints them, would probably vote that down, too.

Judith Lewis Mernit is an HCN contributing editor. She writes from California.

stupid voters and lax groups
Nov 16, 2010 04:51 PM
If the environmental groups had spent a fraction of the time on 26 that they did on 23, this travesty would not have happened. They fell for the oil companies' Trojan horse, which is a damn shame.
prop 19
Nov 16, 2010 05:59 PM
Just because it makes me cringe when I read inaccurate information, I wanted to state three things:

First, marijuana is not "already de facto legal in California." Thousands of people are arrested for simple possession every year, growers are routinely sent to jail and the thousands of Californians on probation are commonly sent back to jail for marijuana.

Second, medical marijuana is taxed by local governments. Medical marijuana dispensaries pay sales tax. Reputable growers pay taxes to the--wait for it--federal government.

Finally, any medical marijuana doctor who charges $250 for a renewal is charging about $100-$150 more than all other doctors. Many people have serious ailments that are helped by medical marijuana. By mentioning anxiety and attempting to paint it as a bogus ailment, you are buying into prison industrial complex talking points and belittling a movement focused on helping the sick and dying. And, besides, anxiety can be a very significant medical condition that marijuana can indeed help.
re: David's comments on Prop 19
Doc Baker
Doc Baker
Nov 16, 2010 06:50 PM
While David's points may have some validity (i.e. that there are indeed legitimate uses for medical marijuana), it should also be acknowledged that Prop 215 is widely abused solely for recreational purposes. There are MD's who openly write 215 recommendations for virtually any kind of malady, real or imagined, without any substantial checkup or alternative therapy suggestions all for the low price of $150-250 and a 15 minute visit.

And I might point out that the Governator just signed a bill that makes possession of less than an ounce a misdemeanor infraction which is roughly as severe as a traffic ticket and doesn't require a court appearance or appear on a criminal record.

Finally, I'd posit that the vast majority of cannabis sales, including 215 sales, are completely off the books and hence, untaxed. It was why most growers were openly opposed to legalization -- their profits would go down. However it's very hard to verify because by it's very nature, the economy is hidden.

Prop 19
Nov 16, 2010 09:55 PM
doc baker, you make some good points. first, if medical marijuana is being used recreationally, one solution would be to legalize marijuana and thus legalize recreational use. doing so would put an end to the majority of the drug war and spare peaceful, responsible adults from prison, loss of property, loss of student aid eligibility, etc.

and while the governator did recently make marijuana possession a traffic-style infraction, it is still illegal. when most people say something like "pot is de facto legal in california" they are really just looking at it from the perspective of the end user; the person who buys an eighth once every couple of weeks. what they do not know is how serious the situation is for people who grow, act as brokers, and do other duties the people at the beginning of the equation have to do. the governator's new rule on possession did nothing to protect growers.

on your final point, i would say you are half right. the people who sell their medicine to the dispensaries likely do so tax free. however, every dispensary in california i am familiar with charges the customer sales tax and pays taxes to the local government.

on another topic, this is an interesting article suggesting prop 23 was a false flag and the real danger was prop 26. when will we learn? we are at war with nature in the form of marijuana and busy destroying nature in the process of resource extraction on a massive level. marijuana is better than oil...fact! after all, you can eat marijuana, use it as medicine, use it for recreation, use it to make textiles, use it to produce fuel (see: ford, henry), use it to paint pictures on, use it to make shoes with, and on and on.