Intense Lobbying Against Proposal By Schipske-Gabelich-Neal To Update/Adjust LB's Oil Production Tax -- On Oil Producers -- To More Closely Parallel Signal Hill; Chamber Wants Measure (Which Propsoses Using Oil Revenue for Police/Fire/Infrastructure) Sent To Budget Oversight Committee (Chair = DeLong), Chamber Says "Impact On Long Beach and Its Corporate Citizens Must Be Taken Into Consideration"

Among those involved in the lobbying effort is the leadership of the Long Beach Area Chamber of Commerce, which is circulating a memo which contends the proposal is a "last second addition" to the agenda (agendized by noon Friday with three Councilmembers, as multiple Councilmembers routinely do on other items) and says the "economic impact on Long Beach and its corporate citizens must be taken into considertion." The advocacy effort aims to send the proposal to the Council's Budget Oversight Committee chaired by Councilman Gary DeLong.

LBReport.com reproduces the Chamber memo text below:

[Chamber letterhead, memo text]

July 2, 2012

To: Honorable Mayor, Bob Foster From: The Long Beach Area Chamber of Commerce

After careful review by the staff of the Long Beach Area Chamber of Commerce on NB-33, we think that it would be unwise to take an action supporting this initiative without careful and critical review of it. This was a last second addition to the agenda and could have a significant impact to Long Beach’s economy. This would enact a 400% increase in the Oil Production Tax in the City of Long Beach. Raising any tax this much is significant and needs to be thoroughly studied.

The economic impact on Long Beach and its corporate citizens must be taken into consideration. One of the major hindrances both California and Long Beach have in the attraction and retention of business is the uncertainty the regulatory climate has created. Our corporate citizens have been overtaxed and over mandated without a great deal of consideration from lawmakers. This feeling of uncertainty makes businesses apprehensive to invest in our economy, and in some cases drives these businesses elsewhere, taking jobs with them.

For these reasons and others, it is our recommendation that the city study this initiative more by sending it to the Budget Oversight Committee to be further vetted. The economic impacts of this ballot measure need to be analyzed and we would like to see what findings the committee discovers and presents to the full council, along with their recommendations.

We appreciate the opportunity to speak on this issue and hope you will make the right decision for both the citizens and businesses that make up the City of Long Beach.

Sincerely,

Randy Gordon
President and CEO

Jerry Miller
Chairman of the Board

The three Councilmembers have proposed 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 "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;

OR

(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 November ballot measure would take advantage of the fact that 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).

Developing. LBReport.com will carry LIVE video of tonight's Council meeting on our front page: www.LBReport.com.