SAN DIEGO -- A California lawmaker told the 10News I-Team that the state is overlooking $1 billion -- in the form of a proposed tax on the state's oil.

The I-Team learned that Chevron, Exxon and Shell spent $70 million to defeat Proposition 87, a measure that would have cost the oil industry over $3 billion.

However, State Assembly Majority Leader Alberto Torrico said, "We're giving away one of our most valuable properties, which is the oil."

Torrico has revived the idea of taxing the 240 million barrels of oil drilled in California to raise money for higher education, which would be about $1 billion a year.

"Just like they do in Texas with George Bush, just like they do in Alaska. Even Sarah Palin recognizes that there should be a charge," said Torrico.

California is the only one of 22 major oil states that does not have an oil extraction tax. Alaska's tax is more than 15 percent. For Texas, it is 4.6 percent. California's suggested percent is 9.9 percent.

"If two Republican governors, two republican states can do it, it seems to me California can do it," said Torrico.

California has tried to tax oil extraction a few times over the last two decades.

Michael Shames of the Utility Consumers' Action Network said, "Because the oil companies are always able to find a savior in the legislature or in the governor's office to block it, it has never come to fruition."

Shames said the oil companies claim an extraction tax would lead to less drilling, lost jobs and higher prices at the gas pump. He called those claims untrue.

"This is a tax that scares the oil companies because they can't get it back from consumers, they can't raise prices," said Shames.

Shames pointed out that oil prices are set by the world market based on supply and demand, not the cost of production. It is a formula that is very profitable for oil producers, he said.

"If they could just pass it on, why would they care? The reason is they can't pass it along and that is why they care," said Shames.

Last year, Gov. Arnold Schwarzenegger also proposed taxing drilled oil but he has sine reversed his position.

Assemblyman Nathan Fletcher said, "I'm not opposed to the concept."

Fletcher is opposed to the bill in its current form, where the money would be earmarked for education and not available to the general fund. He said California already has a high-tax, business-unfriendly climate.

"One of the comparisons you'll see with other states is fine, except you can't compare them that way. Texas has no income tax. California has the highest income tax in the nation. Alaska has no income tax, California has the highest," said Fletcher.

The state also has among the highest deficits at roughly $24 billion -- the same amount of Chevron's record annual profit last year.