Funding For Police, Fire, Infrastructure, Libraries, Rec Services Without Taxing Ordinary Taxpayers? Councilmembers Schipske, Neal & Gabelich Propose Nov. Ballot Measure To Let Voters Update/Adjust LB's Oil Production Tax -- On Oil Producers -- To More Closely Parallel Signal Hill


(July 2, 2012) -- With City Hall's General Fund straining to provide core services amid the prospect of further cuts, Councilwoman Gerrie Schipske, joined by Councilmembers Steven Neal and Rae Gabelich, propose using an already-required November 2012 city election to update and adjust LB's oil production taxes -- paid by oil producers -- to more closely parallel taxes now paid by oil producers in Signal Hill.

The three Councilmembers propose a ballot measure that would use the revenue produced from LB derived oil to fund police, fire, infrastructure and street repairs (and in one measure library and recreation services). This would apply to all oil produced in Long Beach, including "uplands" oil, owned by the City of Long Beach and not subject to "tidelands" restrictions, and could be used for general city purposes.

Today, Signal Hill collects $.83 a barrel while Long Beach collects .43 cents a barrel, the Councilmembers write.

Councilwoman Schipske has previously written that the City is currently, in effect, shortchanging itself on its own oil revenue despite sitting on the 3rd largest oil field in the U.S. On June 20, 2012 she explicitly proposed on her non-taxpayer-paid blog updating/adjusting LB's oil production taxes, using the already-scheduled November 2012 city election (required by two separate petition initiated measure) to adjust/update LB's oil production taxes.

LB has two oil taxes: one enacted by the Council in the late 1990s (15 cents per barrel, set when oil was $24 a barrel) and a second voter approved measure, Prop H (25 cents per barrel) to be used for police and fire.

The agenda item proposes updating/adjusting LB's two oil taxes to address costly current flaws:

1. Prop H failed to use the Producer Price Index, which is used by the City of Signal Hill as an inflation factor. Instead, LB City Hall chose to use the Consumer Price Index (CPI). That was a costly, self-inflicted wound by LB City Hall because the CPI doesn't reflect the real increases in crude oil (which Signal Hill smartly did by using the PPI). Councilwoman Schipske, who several years ago urged using the PPI (as Signal Hill does), says a recent City Management memo acknowledged that if LB had used the PPI instyead of CPI, Long Beach would have realized an additional $1.9 million from this tax since 2006.

2. LB's two oil taxes aren't legally combined. That means the inflation factor applied to the Prop H amount (25 cents a barrel) doesn't apply to the full 40 cents a barrel.

3. LB bases its oil production taxes on the number of barrels produced, and (Councilwoman Schipske says) production has decreased since the late 1990s due to early aggressive drilling. That means a per barrell tax on decreasing production produces decreasing revenue as the number of barrels decreases...although the price of crude oil has increased.

The July 3 agenda item proposes giving LB voters a November ballot opportunity to update and adjust LB's current oil taxes to:

(1) Combine the two taxes and change the inflation factor so that it keeps up with the true cost of oil;


(2) Eliminate both taxes and set a new one that is either $1.00 a barrel or 2% of market value (whichever is the greater).

[memo text]

The agenda item seeks Council approval to have the City Attorney draft a ballot measure that includes alternative 1 or alternative 2 above.

Two petition-initiated measures (a "living wage" ordinance and a charter amendment proposing to change LB's election schedule) already require conducting a special city election in November 2012 (coinciding with the general Presidential election). is interested in knowing: would you vote "yes" or "no" on updating/adjusting LB's oil production taxes? Let us know below via Facebook or our Disqus comment system.

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