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Drinking The Oilmen's Milkshake

November 6, 2008 - 10:41am

Gov. Schwarzenegger just proposed a special session to deal with a seriously out of control budget. To fill an $11.2 billion gap, he proposes taking some money from a reserve fund, and then cutting spending by more than $4 billion and raising taxes by more than $4 billion. The news is in the taxes. There's a temporary sales tax hike similar to what he proposed earlier in the year. But he also would establish a severance, or oil, tax in California on resources taken out of the ground. Severance taxes are common in the rest of the country, but not in California. Oil men allied themselves with Progressive reformers (both sides hated the railroad) and thus avoided the new taxes and regulations of that time. And oil companies have fought off severance tax proposals ever since.