BAKERSFIELD -- Kern County oil producers are up in arms over a severance tax approved by state lawmakers that they say would threaten their ability to do business in California.

The Assembly and Senate recently approved a 9.9 percent oil severance tax on every barrel of oil extracted in the state, in addition to higher vehicle registration fees and new cigarette taxes to raise billions in revenue and avoid the possibility that the state will issue IOU's to creditors.

"To ask the Kern County oil industry to solve the budget of the state of California is just nuts," Les Clark, of the Kern Independent Oil Producers Agency, said.

But that's essentially what the state legislature has done in an attempt to plug the state's $24 billion budget gap.

Clark says it's a move that will cost dozens of jobs and run some independent oil producers out of business.

"It's going to be a tremendous impact," he said. "There's going to be marginal properties out there that won't be developed and put on the backburner and some of those little leases will be shut down."

Kern County produces about 70 percent of the state's oil, and if it were a state it would be the 4th-highest oil producing state in the nation.

Clark says the tax would cost an estimated $600 million to Kern County's oil producers, which includes large producers like Chevron and Aera Energy and several hundred independent ones.

The proposal was approved by simple majorities in both houses of the legislature, as opposed to the required two-thirds majority required to pass the state budget.

Republicans have questioned whether the increases are even constitutional because of the majority issue, and Gov. Schwarzenegger has threatened to veto any proposal with tax increases.

"We shouldn't have any more new taxes anyway," Scott Macdonald of Californians Against Higher Taxes said. "It is the wrong way to go in a time when families and businesses are just stressed out over the recession and new taxes.

The oil tax would raise about $1 billion in the next fiscal year. Opponents say the tax would be passed on to consumers at the gas pump, just months after state lawmakers approved increasing the sales tax rate and higher vehicle registration fees, among others.

"They're doing their fair share; new and higher taxes beyond that are going to put a crimp on any type of economic recovery," Macdonald said. "They're going to kill jobs, they hurt California families, and it is not the route to go."