Published on January 17,
Chevron the Target of Tax Measure
Effort in Richmond
Contra Costa Times
Supporters of a ballot measure to change Richmond's utility
users tax law are mobilizing, with the election still 10 months
Voters will decide in November whether to limit residents
and businesses to one method, instead of two, for calculating
what they owe the city. They would continue to determine payments
by computing 10 percent of the amount charged for utilities,
but the proposed measure would eliminate the option of using
an alternative flat-rate formula.
Most utility users don't use the flat-rate formula because
the resulting amount — roughly $14 million a year, more than
most local businesses gross — is too high. The Chevron refinery,
which city officials say used the flat-rate method because
the 10 percent method would cost the oil company more, would
be affected if the measure passes.
Supporters have begun distributing campaign postcards and
plan to go door to door.
"If I pay 10 percent and you pay 10 percent, the giant in
the city must pay 10 percent," said Juan Reardon, a member
of the Richmond Progressive Alliance, which backs the measure.
Chevron argues that the ballot measure, which also would expand
the definition of utility services to include all gas used
or consumed to produce energy or for other purposes, would
hurt its ability to compete with other refineries. The Chevron
Richmond refinery pays more in taxes, licenses and fees than
other competitor facilities, spokesman Brent Tippen said.
"Chevron clearly understands the important role we play in
helping the city achieve its vision through existing taxes
and fees, but we must draw a line when taxes are illegal, as
recently ruled by the court on Measure T, or unreasonably expansive," Tippen
A judge in December ruled 2008's voter-approved Measure T,
a manufacturers fee initiative, unconstitutional.
The utility users tax measure is one of three city ballot
measures Richmond residents could see this year. Councilman
Jim Rogers and others are pushing for an advisory measure directing
the city to use $1.5 million from utility taxes to keep open
three under-enrolled neighborhood schools. In addition, the
city might ask voters as early as June for higher taxes to
fund paramedic training for firefighters and other public safety
needs. Separately, the West Contra Costa Unified School District
is weighing a bond measure for capital improvements.
Efforts to change the utility users tax law grew out of a
city dispute with Chevron.
The refinery calculated its payments using the flat-rate method
after the 1983 law went into effect, then switched to the 10
percent method in 2006. City officials noticed Chevron's payments
were $4 million a year less than before. Unsure which figures
were correct, the city hired a law firm to obtain and analyze
the refinery's data and verify whether its payments were accurate
between 2006 and 2008. The confidential audit culminated in
a settlement in February in which Chevron agreed to pay the
city $28 million.
The City Council voted unanimously last summer to put the
utility users tax measure on the November ballot.
If it passes, the refinery would not be affected until June
30, 2013, because the settlement allows Chevron to use either
method to compute its utility taxes for the next three years.
Supporters, including council members, estimate the measure
could generate $10 million to $15 million in new annual revenue.
Meanwhile, a version of 2008's Measure T could land on the
same ballot. That initiative would have drawn the bulk of its
revenue from Chevron, but failed to pass legal muster. Contra
Costa Superior Court Judge David Flynn ruled that Measure T
would put companies with operations in multiple cities at a
competitive disadvantage if they must pay fees here and elsewhere.
Officials are considering recrafting the measure, removing
flaws cited by the judge and putting it back before voters
this year, Mayor Gayle McLaughlin said. The City Council is
scheduled to take up this issue Tuesday. [emphasis added]
Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam.