Deal between city and Chevron erases budget deficit, puts $550 million into general fund
on August 16, 2024
Chevron Corp. has agreed to pay Richmond $550 million over the next decade in exchange for the city dropping a proposed refinery tax from the November ballot.
The mayor’s office announced the deal in an Aug. 8 news release, saying the agreement enables the city to avoid being sued by Chevron, while achieving the same goal as the measure.
Under the agreement, Chevron will pay Richmond $50 million annually in the first five years and $60 million annually in the remaining five.
City Council unanimously approved the ballot measure in June, citing concerns about a $34 million budget deficit, as well as the city’s poor air quality. It would have asked voters to consider an excise tax of $1 per barrel of oil refined in Richmond.
According to the mayor’s news release, that city had expected the tax to generate $60 to $90 million per year, based on recent refinery production data.
Chevron confirmed to Reuters that the two sides reached an agreement that settled litigation and took the measure off he ballot.
The agreement was negotiated by the city attorney and an hoc committee of Mayor Eduardo Martinez, Vice-Mayor Claudia Jiménez, and Councilmember Doria Robinson, according to the news release. The money will go into the general fund, beginning next year.
Other ballot measure
City Council was told that the proposed excise tax was on stronger legal footing than a tandem tax that Chevron successfully fought in court after voters approved it in 2008.
Chevron disagreed, calling the excise tax punitive and saying it would work against the Richmond community, which Chevron has supported with millions of dollars.
Chevron, which set up Richmond’s shoreline as Standard Oil Co. in 1902, is the city’s largest employer, with about 1,200 workers. It also is the city’s biggest taxpayer and Contra Costa County’s second biggest, paying $46.4 million last year. The oil giant reported $21.3 billion in income last year.
Chevron is the source of much of the city’s pollution. It chalked up more than 600 air pollution infractions with the Bay Area Air Quality Management District, all of which were erased in February when the two sides agreed to a $138 million settlement, which also included the Martinez refinery.
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