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Local News

County Supervisors Move Toward Putting Oil Severance Tax Before Voters

But the board is divided, with Steve Lavagnino and Peter Adam against a ballot measure, saying a tax would hurt jobs in their North County districts

Whether Santa Barbara County voters would approve an oil severance tax next summer remains to be seen, but what the ballot language might look like became a little clearer after Tuesday's Board of Supervisors meeting.

On a 3-2 vote, the supervisors instructed county staff to draft a ballot measure for a special tax that would go before voters in the June election.

If approved, the county would charge oil producers a severance tax of a dollar a barrel, which proponents say would be used to pay for parks, libraries, fire services and deferred maintenance projects.

Tuesday's meeting was contentious, with Supervisors Salud Carbajal, Doreen Farr and Janet Wolf voting for the tax measure. Supervisors Peter Adam and Steve Lavagnino voted against it, saying a tax would hurt jobs in their North County districts, which are heavily reliant on the energy industry.

It's unclear whether Carbajal, Farr and Wolf will approve language for the measure to include offshore drilling operations within three miles of the tideline, including directional drilling operations, which fall under the county's purview.

Including offshore operations in the ballot language would have a major impact on the amount of revenue flowing to the county were such a measure to pass.

Platform Holly, which sits off the Goleta coastline, produces 1.5 million barrels of oil annually, more than half of all the onshore operations combined, according to Doug Anthony, director of the county's Energy Division.

County counsel explained that the measure could include offshore operations, instead of just onshore production, but both Carbajal and Farr said they needed more time to consider the implications.

Some environmentalists expressed concern that the tax might actually provide an incentive for drilling if the county has revenues to gain. Several oil industry representatives also appeared Tuesday, warning that they would be prepared to fight the measure.

Blair Knox, spokesman for the California Independent Petroleum Association, said his organization has had a "stellar record" of beating severance-tax ballot measures that local, regional and statewide groups have tried to pass.

California — unlike other oil-producing states such as Alaska and Texas — does not levy a severance tax on oil producers.

Western States Petroleum Association spokesman Nick Ortiz said that while California does not have a severance tax, the oil already is taxed in other ways. In addition to having some of the highest property taxes in the country, Santa Barbara County taxes oil based on the property's value while the oil is in the ground, whether it's produced or not, he said.

Others who supported the ballot measure said a severance tax is a normal cost of doing business in other states and called for the oil industry to do "its fair share."

Linda Krop, chief counsel with the Environmental Defense Center, said the energy industry should contribute what it owes, but was concerned about incentivizing oil production because of the promise of new revenues. She said she would like other options explored as well, such as whether a tax could be applied at the wellhead to producing and nonproducing wells, spreading the financial burden.

Santa Ynez Valley resident Bob Field, who said he supports the oil industry and drives a GMC Yukon SUV, told the supervisors the tax is a good idea.

"It's tough here," he said, adding that companies that choose to operate in Santa Barbara County often minimize environmental and safety concerns. "They need to throw a sweetener into the deal."

A severance tax would "not crush the oil industry," he added.

Throughout the meeting, the Board of Supervisors' North-South divide was on stark display. Adam and Lavagnino refused to discuss the specifics of the measure because they said they did not support it.

Lavagnino noted that the county's top 10 taxpayers are almost all oil companies, and he lamented the board's recent vote to place additional restrictions on a Santa Maria Energy project near Orcutt.

"I think this is a futile attempt," he said of the ballot measure. "I really do feel it's a waste of money."

Adam said the county is already known for being unfriendly to business, and a severance tax would exacerbate that perception.

But Carbajal said the money could be used to repair county roads and infrastructure, an issue Adam has emphasized previously.

"This tax will not be paid by 99.9 percent of our residents," he said.

Adam disagreed, saying it would profoundly affect residents in his district, because many of the high-paying jobs are in the energy industry.

Farr said she thought "it's never a bad idea to ask the public what they think," adding that the county could use the revenues "in so many ways."

County staff is scheduled to bring back the ballot language for a first reading on Jan. 21.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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