These Nine Bad Bills are rushing through the legislature with no Sacramento media left to WARN the public.
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(July 29, 2020, 4:35 a.m.) -- The California State Lands Commission's Chief Counsel informed the City of Long Beach n writing three weeks ago, and SLC staff reiterated in two teleconfernces thereafter, that City Hall's proposed oil barrel production tax -- coming to the second of three Council votes on July 29 for placement on the November 3 ballot -- may violate the City's Tidelands Trust agreement with the state of California.
The agency's lawyer said it could trigger litigation, not just over the now proposed measure but also possibly challenging LB's current oil production tax. [LB City Hall has been collecting an oil production tax for police and fire purposes, voter enacted Measure H, since 2007.] State Lands Commission Chief Counsel's July 7 letter is included as Attachment F to the city staff agendizing memo for the July 29 agenda item. . Also attached as Attachment F is a memo from LB's Dir. of Energy Resources noting it held two follow-up conferences with SLC (July 13 and July 22). It indicates SLC staff (the agency that oversees uses of state lands; its governing board consists of the Lt. Governor, State Controller and Governor's Director of Finance) says the agency seeks additional time to analyze the barrel tax proposal and consult with the California Attorney General's Office. It also indicated SLC staff voiced concerns about the legality of the entire oil barrel tax in relation to the State's share, not just the currently proposed increase. Meanwhile, the City Council faces a drop-dead deadline of August 4 to put a finalized resolution proposing the oil production tax increase on the Nov, 3 ballot. . [Scroll down for further.] |
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At the July 29 meeting, City staff now proposes a change in its originally proposed measure. In order to minimize the concerns expressed, one course of action is to set a total Barrel Tax rate that is competitive in the market. A Barrel Tax increase of 12 to 15 cents per barrel can be competitive with the market, depending on what indices other cities use. A 12 to 15 cent increase would place the total Long Beach tax in line with recent Signal Hill oil Barrel Tax rates, so that Long Beach would not stand out in terms of tax rate. Also, by using the more stable consumer price index (CPI) the tax will be relatively consistent. Some of the rates are periodically index adjusted. Signal Hill is one of the cities along with Long Beach that makes periodic adjustments and Signal Hills rates are shown for several different time periods as they vary significantly over time. "When combined with the special purpose tax the total tax would increase from 48 cents to 63 cents per barrel. A 15 cent tax increase would generate an estimated $1.6 million in the first year. The new tax would take effect on January 1, 2021, or the earliest first of the month thereafter as permitted by law. Further, the new 15 cent oil Barrel Tax will be suspended in any month if realized oil prices are at or below $20 per barrel."
As early as July 7 -- the same date the Council voted 9-0 to direct city staff to pursue the the General Fund ("blank check") oil barrel production tax increase -- State Lands Commission raised issues over the action. In a letter date July 7 -- which Councilman Richardson and city staff didn't publicly disclose at the July 7 Council meeting (beyond saying there'd been SLC/City discussions), Chief Counsel Seth Blackmon said SLC first learned of the proposal on July 3 (when it appeared on the Council's scheduled July 7 agenda). The SLC letter notes that city staff and Councilman Rex Richardson (agenda proponent and chair of the Council's State Legislation Committee) discussed the proposal on the afternoon of July 7. SLC counsel Blackmon's letter stated: ...While Commission staff understands the City's rationale for the proposed tax, staff is concerned that the proposed tax increase may improperly affect the City's fiduciary responsibilities as trustee for the State, as well as its contractual obligations as the unit operator for the Long Beach Unit and West Wilmington. More specifically, staff is concerned that the tax may already have resulted in an inappropriate redirection of State funds, that any increase in the existing tax may exacerbate the injury, and the increase may not be in the best interests of the State... |
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