Assembly Bill 656, authored by Assemblyman Alberto Torrico, was suspended after a second hearing at the Assembly Committee of Revenue and Taxation on Monday.

 AB 656, proposing an oil and gas severance tax with revenue going to California's higher education system, was introduced last February and went through the first hearing in May, but the hearing was canceled by Torrico.

 During the second hearing, Chairman Charles Calderon and the Revenue and Taxation Committee said they believed the bill needed further discussion and a possible decrease of the 12.5 percent tax rate originally proposed to a more reasonable 6 to 7 percent. 

"The real truth here is the bill is going nowhere--it's not getting off the floor," Calderon said during the hearing.  "Until we can function properly at the proper as constitutional form of government without these initiatives tying our hands in terms of what we can do and what we can't do, we are not going to solve that here today." 

Calderon said he believed the bill would be more successful if the tax percentage was decreased by half. He said the bill was not meant to pin one group against another, but one group would benefit more. 

During the hearing the opposition's presence overshadowed the proponents of the bill. The 30 supporters of the bill present at the hearing were no match for the 350 "red shirts," a nickname given by Calderon to the opposition because of their red "Save Our Jobs" shirts, who rallied and cheered outside.

Many of the opponents were from Kern County as well as Los Angeles, San Luis Obispo, and Santa Barbara counties to name a few. 

Among the sea of red was Assembly member Jean Fuller, 32nd Assembly District representative, who took the lead for the opposition. Fuller, whose district mainly consists of Kern County, including cities such as Bakersfield, Ridgecrest, Tehachapi, Taft and Kern River Valley, said AB 656 would greatly impact her district because many oil companies reside in those areas. 

"Please understand there are areas of Bakersfield and Kern County that have unemployment rates as high as 30 percent," Fuller said, adding that 70 percent of oil companies in California are located in her district. "This bill would kill thousands of jobs in Kern County and other parts of the state.  Today I learned, as (people) came up and told me all the places they were from, how devastating it would be." 

She reputed Torrico's arguments regarding California being the only state producing oil without a severance tax by adding that if the bill passed, California would be the highest taxed state on oil extraction. She said even though California does not have a severance tax, many of the other states producing oil, such as Texas and Alaska, don't have high corporate taxes, like California. 

She said focusing on one industry and putting the burden on that industry to fix the problems in higher education was unreasonable.

 But Torrico and supporters of the bill disagreed. He said the bill was not meant to target small businesses but larger oil corporations, such as Shell and Cheveron. He said more than 70 percent of oil extraction businesses are run by bigger oil companies.  

"I am not prepared today to talk to you about reducing the percentage, but I am prepared as we go forward to talk about added protection to small businesses because I think that was the focus of the testimonials today," Torrico said, adding that the bill has made an exemption for stripper wells, oil or gas wells that only produce up to 10 barrels a day for any 12-month period.  Stripper wells are mainly owned by smaller companies. 

He said the bill isn't intended to hurt small businesses, it's meant to improve higher education.  Torrico said California should stop overlooking students because they are the future of the state.   

Robert Torres, President and CEO of Associated Students Inc. at Sacramento State, agreed.  

He said many California graduates in professions, such as teaching, criminal justice and nursing, went through the public school system of higher education. 

"This bill is a solution to investing in higher ed--to ensuring that California's future is bright." he said.  "The CSU alone is the economic drive for California, along with the UC's and community colleges. Investing in CSU is investing in California." 

Proponents of the bill also addressed the lack of support during the hearing.  Torrico said the committee should not overlook the lack of attendance from supporters. 

"We have collected 50,000 signatures in support of this bill," he said. "Obviously there isn't 50,000 people here, but we have 50,000 supporters of this measure," he said.  

The committee is due back to deliberate the suspended file within the next month. 

For more information about the bill, visit leginfo.ca.gov.