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Know the West

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.