In late July 2009, the California Senate and State Assembly agreed on a budget that included more than $15 billion in service cuts for working families. Through line-item vetoes, Governor Schwarzenegger cut over $650 million more, including spending on health care, child welfare, and AIDS prevention. Nevertheless, the politicians yet again absolved oil companies of an industry-wide tax called the oil severance tax.
The oil severance tax proposal would have taxed oil companies to extract oil in California. After the oil barons defeated the previously proposed oil severance tax in 2006, California remained the only oil-producing state not to levy the tax, giving the oil companies a free ride. Even Alaska passed a 25 percent severance tax under Governor Sarah Palin in 2007.
Even a small 6 percent oil severance tax would have generated over $1 billion for California annually, yet California politicians continue to let big oil off the hook. In 2008, as the economic crisis worsened, Chevron Corp. reported record profits of almost $24 billion.
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