A too-slick budget trick

A lot of appalling program cuts and questionable revenue schemes are on the horizon as California lawmakers seek to close a $24-billion budget gap, and many will pass with a wince and a shrug given a lack of better options. But some of the cheap budget tricks on the table in Sacramento are so outrageous and unnecessary that they should be rejected without further ado. A case in point: Gov. Arnold Schwarzenegger’s attempt to subvert the public process and allow the first new oil drilling project off the coast of California in 40 years.

In January, the California State Lands Commission considered a bid by the Houston oil company Plains Exploration & Production to open several new wells from an existing oil platform off the coast of Santa Barbara. The platform is in federal waters just beyond the three-mile limit controlled by the state, but Plains Exploration wanted to drill “slant wells” to access oil under state lands. In return, the company promised to cease operations by 2022 and close not only that platform but three others it operates off Santa Barbara and two onshore processing facilities. It also promised to donate 4,000 acres of land for preservation.

The problem with these promises is that they were written in the sand at low tide. The attorney general’s office and the Lands Commission staff agreed that there was no way for the state to enforce the closure agreement. Moreover, the deal was reached in secret between Plains Exploration and a Santa Barbara environmental group, and its terms were never disclosed to the public. The Lands Commission rightly rejected the plan on a 2-1 vote, and that should have been the end of it. But the lure of oil revenues proved too powerful for Schwarzenegger. The governor’s office has introduced legislation that would allow the Department of Finance to overrule the Lands Commission on the Plains Exploration project, under the justification that it would generate $100 million for the state next year and an estimated $1.8 billion through 2022.

Admittedly, the state could use the money. But that’s not a good enough reason to subvert the authority of the Lands Commission, sell California’s coastline in exchange for empty promises, ignore the wishes of Santa Barbara residents and dismiss the outcome of a long process of analysis and public hearings. The Lands Commission, in fact, was created in 1938 to bring more transparency to the awarding of oil leases after a scandal involving the Department of Finance.

If the governor really wants more oil money, there’s a better way: He could resurrect a plan he introduced last year calling for a 9.9% tax on crude oil extracted in the state. California is the only state in the union that doesn’t collect such an extraction tax, and Schwarzenegger estimated in November that it would bring in roughly $1.2 billion in the next fiscal year -- dwarfing the $100 million that would be generated by the Plains Exploration project.