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LWV League of Women Voters of California Education Fund
Smart Voter
Los Angeles County, CA May 1, 2007 Election
Proposition H
Police and Fire Public Safety Oil Production Act
City of Long Beach

Municipal Code Amendment - 2/3 Majority Approval Required

Pass: 15,423 / 70.0% Yes votes ...... 6,609 / 30.0% No votes

See Also: Index of all Measures

Information shown below: Summary | Impartial Analysis | Arguments |

Shall Proposition H, the Police and Fire Public Safety Oil Production Act, which amends the Long Beach Municipal Code to provide dedicated funds for police officers and firefighters by assessing an additional twenty-five cent ($0.25) per barrel special production tax on oil producers in Long Beach, with a CPI adjustment, be adopted?

Summary Prepared by LWV Long Beach Area
Education Fund:

The Way It Is Now: Currently, oil producers in the City pay business license a tax of $.15 per barrel, as provided under the Long Beach Municipal Code. This fee was set in 1990 and has not changed since then. The tax applies to all producers of oil from any well located in the city, including the City of Long Beach when functioning as a unit operator. Other oil-producing cities impose similar taxes; Signal Hill imposes a tax of $.60 per barrel, Seal Beach $.58, and others charge from $.20 to $.34. The proceeds can be used for any purpose.

What Measure H Would Do:

  • Impose an additional tax under the Municipal code, to be paid by oil producers, of $.25 per barrel for oil produced in the City of Long Beach
  • Create a permanent special fund, the “Police and Fire Public Safety Oil Production Act Fund” for the special tax proceeds.
  • Provide that the proceeds can be used only for police officers and firefighters and related costs for public safety needs, natural and man-made disasters and possible acts of terrorism.
  • Require an annual independent financial audit of the revenue and expenditures under this fund.
  • Provide for an automatic annual adjustment to the tax, beginning 6/1/08, based on the most recent CPI change.
  • Provide for suspension of the special tax for any month in which the average price per barrel is less than $20.

    The ordinance, because it is a special tax, requires approval by 2/3 of the voters, and would take effect ten days after the declaration by City Council of its passage.

Supporters Say:
  • Prop H would provide an additional $3.8 million for police and firefighters at no cost to taxpayers.
  • Long Beach is not receiving its fair share of oil production revenue; the current tax was set in 1990 and has never been increased.

Opponents Say:
  • Prop H only pretends to restore a fair amount of oil tax revenue. A percentage tax would be fairer and simpler than a per barrel tax.
  • Using the CPI as the basis for tax adjustments does not adequately reflect potential increases in oil prices.

Impartial Analysis from City Attorney
Robert E. Shannon
Voter approval of Proposition H would add Sections 3.80.222, 3.80.224, 3.80.225 and 3.80.227 to the Long Beach Municipal Code, and establish an additional twenty-five cent per barrel production tax on oil producers within the City of Long Beach, the use of which will be dedicated to certain purposes. Approval of this measure will require an affirmative vote of two-thirds of the voters.

Presently, the City of Long Beach imposes a fifteen cent per barrel tax on the business of oil production from wells located in the City of Long Beach. The proposed Municipal Code amendment would impose an additional tax of twenty-five cents per barrel on that production (the "special tax"). The special tax would be further adjusted for inflation/deflation as measured by the Los Angeles+Riverside+Orange County Area Consumer Price Index. In the event that the price per barrel (as reported on the West Texas Intermediate Crude Index) falls below twenty dollars for any month, the special tax would be suspended for that month. The proceeds from this special tax may only be used for police officers and firefighters, and related costs including, but not limited to, equipment, facilities and training.

  Official Information

City of Long Beach
Local Facts

City Profile
LWV Long Beach Presents Live 'Pros & Cons' on the Ballot Measures

date: Saturday, April 21
time: 10 am - 12 noon
place: Los Altos Library, 5614 Britton Dr
plus: short presentation on the city Budget for fiscal 2008 by David Wodynski, Bureau Manager, Budget and Performance Management Bureau
more info: LWV Long Beach Area
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Arguments For Proposition H Arguments Against Proposition H
A YES vote on Measure H will generate an additional $3.8 million for our fire and police departments at no cost to taxpayers.

Measure H increases the charges that oil companies pay to the city for oil extracted from Long Beach.

Measure H requires this additional money be used only for public safety funding.

  • Currently, oil companies pay only 15 cents per barrel of oil they extract from Long Beach.
  • This charge was set in 1990 and has never been increased.
  • Measure H will increase that to 40 cents per barrel, and dedicate the additional funds directly to funding our police and fire services.

Neighboring cities such as Signal Hill charge up to 60 cents per barrel. Clearly, Long Beach is not receiving its' fair share of oil production revenue.

Measure H is not a tax on consumers; it is a payment to our city by oil companies in exchange for crude oil taken from within the City of Long Beach.

A YES vote on Measure H means increased funding of $3.8 million for Police and Fire Departments, at no cost to taxpayers. No wonder Measure H is endorsed by Mayor Bob Foster, Long Beach Firefighters Association, Long Beach Police Officers Association, City Auditor Laura Doud, and the Long Beach Area Chamber of Commerce.

Laura L. Doud
Robert M. Luman
William Ellis
Terry L. Harbour
Richard A. Duree

Rebuttal to Arguments For
Yes (to correct a small misstatement in the original opposing argument): Prop. H would add a new 25 cents per barrel tax on top of the city's existing 15 cents per barrel. Proponents exclaim that this new tax would yield the city 3.8 million dollars of new annual revenue, which could be earmarked to public safety. But that amount is actually nothing to brag about.

At current and recent levels of oil prices - conservatively at least 50 dollars per barrel - a change to the Culver City oil tax formula - 1.8 percent of gross receipts - would increase the city's annual revenue by over 11 million dollars - not merely under 4 million. The City Council could as easily have presented us this or another fair and practical oil tax alternative which would be far more lucrative than Prop. H's proposal.

Indeed proponents' facts show that Long Beach's total tax on oil, even after Prop. H, would still remain lower than Signal Hill's existing tax, let alone Culver City's. Prop. H is being promoted as a wonderful windfall for public safety, but in fact its 'updated' tax will quietly keep Long Beach a low-tax haven for oil producers.

Vote NO. Tell Council and all the sweet-talk sweet-deal politicians to get real on both public safety and oil taxes. Get more police on our streets now! Impose lucrative oil taxes that can really help!

Mathematical and Statistical Analyst

Prop. H is a sweetheart deal masqueraded as aid to 'public safety'.

If you oppose all taxes, then vote NO. But if you favor genuine fair-share taxation, not fake taxation, again you should vote NO.

That's because Prop. H only pretends to restore a fair amount of oil tax revenue to the city. The proposal would up the city tax on each barrel of oil produced, from 15 cents to 25 cents, to be adjusted annually for inflation by the local consumer price index (CPI). Both the raise and the adjustment are farcically low.

The 15 cent tax originally aimed to capture about 0.6 percent of gross receipts, for oil priced $25 per barrel. The same percentage would now make the tax close to 50 cents per barrel.

In fact, a percentage tax would be fairer and simpler than a fixed per barrel tax. Still highly affordable for oil producers, it could be far more lucrative for the city. Culver City now uses 1.8 percent. Prop. H's tax does not even restore the original 0.6 percent.

Unlike a percentage tax, a fair per-barrel tax requires adjustment for price changes. Prop. H however uses general inflation (CPI) rather than what we may expect for annual rises in oil prices. Historically oil has been cheap, hence widely used, so oil price changes have well matched the CPI. However, oil will phase out and get relatively ever more expensive. The economy will get ever more efficient and use less oil. Hence, in future the CPI will undershoot oil price increases. So, use of the CPI is yet another recipe for a farcical tax.

Vote NO: if we have a tax, let it be fair and lucrative and really aid public safety.


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Created: July 30, 2007 17:52 PDT
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