The Chevron-taxing Measure T bit the dust in court last month, but another plan to put millions of the corporation’s money into the City of Richmond’s budget is ready to go.
The city could get as much as $15 million more a year if a campaign called “End Chevron’s Perk” persuades voters to end a cap on the Chevron refinery’s utility users’ tax this November.
The campaign, which the Richmond Progressive Alliance is kicking off next week, aims to convince Richmond residents that Chevron should pay the same 10 percent utility tax that every other household and business in the city pays.
The additional city funds could go toward a variety of things the city is struggling to pay for right now such as city employees, public programs and the high-performing Coronado School the city funded to keep open, said city councilman Jeff Ritterman.
Unlike the Measure T tax measure that a judge ruled violated state law last month, this ballot measure would simply write the corporate tax break out of city law. For years, Chevron was the only Richmond utility user that could pay a flat utility tax fee of at least one million dollars “for each percentage of tax imposed for any utility tax year” instead of the full percentage tax rate. Right now the flat tax fee is $1.4 million for each percentage of tax.
The Richmond City Council approved the utility tax cap back in 1983.
In response to protests against the corporate tax break, Chevron agreed in 2006 to pay a 10 percent tax instead without disclosing any utility user records.
But after an early 2009 city audit found that Chevron – the second-most profitable US corporation in 2008 – had underpaid its utility taxes to the City of Richmond since 2006, the city council showed it was inclined to change the refinery’s utility tax responsibilities.
On May 5, all city council members, except an absent Tom Butt, voted to put the tax equalization measure on the November 2010 ballot.
As part of the previous $28 million settlement in the tax audit case with Chevron, however, the measure could not be enacted until 2013, according to Ritterman.
“Obviously, that’s not the way we wanted it, but we thought the settlement money was advantageous enough,” Ritterman said.
Chevron has not put out a formal statement about the campaign yet. In the past, Chevron representatives have said the City of Richmond has a history of putting much larger tax burdens on them than other cities with refineries.
“‘The government makes more money on the Richmond refinery than Chevron does,”’ said Mike Wirth, a Chevron executive vice president, told the New York Times last year.
Chevron’s Richmond refinery pays double the amount of local taxes, licenses and fees that each of its two other U.S. refineries in El Segundo, Calif. and Pascagoula, Miss. pays, according to Brent Tippen, a Chevron Richmond refinery spokesperson.
“Refining is a highly competitive business,” Tippen said. “In Richmond and Contra Costa County, we face challenges that put our company at a competitive disadvantage compared to other Bay Area and California refiners, both from a tax and environmental standpoint.”
Ritterman did not deny this charge.
“I say to those other cities, ‘Up your tax rates,’” Ritterman said. “All cities are fighting for their survival right now and, as a society, we need to take some of that profit. It shouldn’t all be for going into private business and the wealthy.”
George McRae, 56, who lives on the border of Richmond and El Cerrito, said he supports any measure in which Chevron gives more money to the City of Richmond. McRae likened Chevron to the penny-pinching Exxon Corporation, which fought a $5 billion fine down to a less than $400 million fine after the Exxon-Valdez oil spill off the coast of Alaska.
“It’s a matter of principle and good faith that they could so easily let them, let Richmond, have the money it needs to solve so many of its problems,” McRae said. “Richmond is trying to do things like open Indian gaming casinos and they already have one of the highest sale taxes in the state (9.75%).
“It’s suffering and it’s just ridiculous for [Chevron] to be holding on to this money. They could solve Richmond’s problems with just pocket change – they really could – and it’s outrageous that they don’t do that.”
The “End Chevron’s Perk” campaign will have its first meeting on Wednesday, Jan. 13, 2010 from 7 to 9 p.m. at 402 Harbor Way in Richmond. The meeting will be a place for those interested in the measure to educate themselves and start thinking about endorsing it.