State budget includes offshore oil drilling.

Forty years after the disastrous Santa Barbara oil spill, state lawmakers are once again allowing drilling in California waters.

Monday night's deal to backfill the state's $26.3 billion budget gap included a tentative agreement to allow oil producer Plains Exploration & Production Co. to expand drilling off the coast of Santa Barbara, where it already maintains platforms in federal waters. The company would pay the state $100 million up-front, plus royalties over the project's 13-year lifetime, to drill in state waters closer to shore.

Last September, Santa Barbara Supervisors asked Gov. Arnold Schwarzenegger to reconsider his opposition to offshore drilling.

According to a July 21 story on the Dow Jones newswire, "Environmental and community groups in Santa Barbara have hailed the project, called Tranquillon Ridge, as a major milestone in their efforts to shut down the oil rigs off Santa Barbara's coast. Current law allows offshore drilling operations that were in place prior to a 1981 moratorium on new offshore drilling to continue indefinitely."

But some of the state's environmentalists are not pleased. "Drilling is dirty and dangerous and will not solve our overdependence on fossil fuels,” said Dan Jacobson, legislative director for Environment California. “Our coast is our economy and our economy is our coast. The Governor has made the oil companies happy, and now we face the threat of a major oil spill off our coast for the next 40 years."

Central Coast Assemblyman Bill Monning says that the governor's deal with Plains Exploration will result in less money for the state, as compared with a Democrat proposal that would have generated $900 million the first year.  "I would have a very tough time supporting the oil drilling off Santa Barbara," he said.

Santa Barbara has been the symbolic center of the state's oil drilling debate since a 1969 spill that poured more than 3 million gallons of oil into the Santa Barbara channel, spread along 35 miles of coastline and contaminated roughly 800 square miles of ocean.

A HuffPo blog post spins the deal as a win for oil companies and a loss for the state's environmental movement. "The state could get about $100 million in revenue from new oil leases off Santa Barbara," Chris Kelly writes. "That might seem like a pitiful amount of money, because it is, but we'll also undo four decades of environmental law."

Jessica Lyons contributed to this report.