Tuesday, September 26, 2006

Spending on California's Proposition 87 headed for $87 million

The battle over Proposition 87 in California this November has spurred fundraising - pro and con combined - to $79 million and seems destined to become one of the most expensive contests in the state's history. Prop 87, formally known as the "Clean Alternative Energy Act," would tax petroleum production from California for the first time and raise an estimated $4 billion over 10 years. The goal: to cut the use of petroleum (natural gas and products refined from crude oil) by 25 percent over the next decade.

California would join other states that tax petro production at varying rates. The tax would range from 1.5% and 6% depending on the price of a barrel of crude oil, according to the California Legislative Analyst Office. It would generate between $225 million and $485 million of new revenue annually for California to fund grants to businesses and universities to research and develop alternative energy and educate consumers about their application.

Here is how several states currently tax petroleum production:
- Alaska, 15%
- Louisiana, 12.5%
- Kansas, 8%
- Oklahoma, 7%
- North Dakota, 6.5%
- Wyoming, 6%
- Montana, 4.8%
- Texas, 4.6%
- New Mexico, 3.75%

According to a Marketwatch.com report citing state records today, The Yes on 87 campaign has raised about $32 million while opponents have raised more than $41 million.

A Field Poll and a survey by the Public Policy Institute of California in conjunction with the William and Flora Hewlett Foundation this summer both reflected strong support for the Proposition. In the PPIC survey, 51% of Republicans were in favor.

California's 2005 oil production represented about 12% of the U.S. total.

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