City leaders urge against Chevron tax measure
on May 7, 2010
The vote will come in November, but the drive for signatures is already in high gear all over town.
At grocery markets, banks and retail outlets, paid hands are asking for signatures to qualify a measure for the ballot that could reduce utility taxes in the city.
Chevron Corp. is behind the measure, in part because it would counter the city’s own utility tax measure slated for the November ballot.
The city’s measure would eliminate a flat-rate method that Chevron uses to pay its utility tax, which comes to about $19 million this year. The Chevron-backed measure would reduce the rate for all payers in the city, a cut that could cost the city millions in revenues.
At the City Council meeting Tuesday, the council voted 6-0 – with Councilmember Nat Bates absent – to declare opposition to the “City of Richmond Utility Users Tax Reform Act,” the name of the proposed measure for which signatures are being gathered.
About 4,000 signatures are needed by summer to qualify for the ballot.
Chevron spokesman Brent Tippen said the measure is needed because Richmond residents and businesses are paying a 10 percent tax on their utility usage, the highest rate in Northern California.
“This measure cuts in half the utility tax paid by every Richmond resident and small business, and exempts seniors and low-income families from paying any utility users tax, helping people in the most need during these difficult economic times,” Tippen said.
But city leaders, with Mayor Gayle McLaughlin and Councilmembers Jeff Ritterman and Tom Butt being among the most vocal critics, say the measure is a devious ploy that would save most residents just a few dollars while gouging the city’s revenues by millions.
“This is a proposal being put out there by Chevron,” McLaughlin said during the public meeting. “And it would greatly harm the city of Richmond.”
McLaughlin pointed to a study produced by the city’s Finance Department that estimates passage of the tax reduction bill would reduce the city’s utility tax revenue by $10 million to $25 million annually. If Richmond’s measure passes, Chevron has said it could end up paying nearly $30 million annually, about $10 million more than normal.
McLaughlin, who has been at constant odds with the multinational energy giant since she became the first Green Party mayor of a city of more than 100,000, said the measure is meant to dupe the public.
“This is something that will help Chevron, but it is being sold as something that will reduce the average citizen’s taxes,” McLaughlin said.
The measure the city proposes would eliminate an alternate flat-rate formula that currently benefits Chevron.
The refinery used the flat-rate method until 2006, when it switched to calculating 10 percent and its payments began coming in at about $4 million below previous years. The city responded by retaining an outside firm to conduct a confidential audit on Chevron’s tax payments from 2006-8. A settlement reached last year resulted in Chevron agreeing to pay about $28 million.
Tippen added that the proposed ballot measure Chevron supports would provide stable revenues and encourage green development.
“This measure would assure large manufactures in Richmond, like Chevron, would guarantee a $20 million utility users tax or 10 percent of their actual utility usage, which will be double the percentage that Richmond residents will pay,” Tippen said. “This measure exempts solar, wind, biofuels and other forms of alternative energy from paying any utility users tax, ensuring Richmond does it part to encourage energy conservation programs.”
City leaders are clearly concerned.
Tensions are running high in a city with 19 percent unemployment and a persistent crime problem. Chevron hinted earlier this year that its Richmond refinery could face closure, sending chills through many residents. Chevron has been the city’s biggest taxpayer for decades, accounting for one-third to one-half of the city’s general fund.
Chevron has been known to pump sizable sums into local politics in the past, and this election year will include McLaughlin’s bid for re-election. Tax-weary voters may respond to the ballot measure’s language, which emphasizes cuts to residents’ utility tax rates.
“We’re really counting on the residents here to come through and understand this,” Ritterman said. “This is kind of requiring us to say ‘okay, this may save us a few dollars ourselves but at what cost to the city?'”
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