Tax Issue Shades Gov.'s Green Pledge

Schwarzenegger has been touting his environmental credentials as he opens his reelection campaign, driving across the state earlier this week in a big green bus decorated with pictures of Yosemite. He is due to give a speech on the environment Sunday afternoon at a conference of Western governors in Sedona, Ariz.

Schwarzenegger won't endorse the initiative because it would impose a $400-million extraction tax on oil companies, a move at odds with Schwarzenegger's position that tax increases would hinder California's economic recovery, the governor's office said.

Schwarzenegger "believes oil companies must invest their record profits toward new research in addressing the nation's dependence on oil," said Adam Mendelsohn, the governor's communications director. "However, the governor does not support new taxes."

A spokeswoman for the initiative predicted the measure would pass despite Schwarzenegger's opposition.

"The governor and Big Oil are on the wrong side of this issue," said Julie Buckner of the California Clean Energy Campaign. "And we believe that in November they'll find themselves quite alone, because voters in California strongly favor cleaner air, cheaper fuel prices, greater energy independence and less profit for Big Oil."

Some environmentalists said the governor's stance is worrisome, suggesting he won't support environmental policies opposed by business interests that are a prominent part of his political and fundraising base. The oil industry has contributed about $1.7 million to the governor's campaign accounts, with nearly $600,000 of that coming from Chevron Corp. alone, state records show.

Schwarzenegger is conducting a major fundraising effort. His goal is to collect $50 million for his reelection campaign and $25 million for the California Republican Party.

As gas prices have soared, Schwarzenegger has criticized the oil industry for its huge profits. He has directed his staff to investigate possible price gouging in the state, and findings are due next week.

"It's very disappointing that the governor would side with the oil companies against clean, renewable fuels," said Sierra Club lobbyist Bill Magavern.