City Council could give OK for oil tax ballot measure by end of the month

A potential tax on oil production in the city moved one step closer toward going before voters: The Long Beach City Council voted unanimously Tuesday for documents to be prepared for the tax measure, which they will consider putting on the November ballot later this month.

The move to adjust the tax on oil production comes as the city tries to act on its framework for reconciliation plans meant to address issues of racial inequity. The new tax dollars would be invested in communities of color and lower-income neighborhoods that have been impacted by oil production and pollution, city officials said.

To be on the November ballot, the council would have to submit the tax proposal to Los Angeles County election officials prior to the Aug. 4 deadline. The council will likely hold a special meeting at the end of the month to hear a more in-depth report on the possible impacts of such a tax and potentially vote to put it on the ballot.

“For over a month, governments from all levels have heard from communities that they expect more from us, specifically when it comes to the investments that we make and our commitments to addressing inequality in our communities,” said Councilman Rex Richardson, a co-sponsor of the item.

The city’s current tax rate is $0.48 per barrel, about 19 cents less than that of Signal Hill. A previous tax, Prop. H passed in 2007, allocates about 33 cents of the city’s current tax toward police and fire operations in the city’s Tidelands Area, but like other oil revenues, the money is bound to that strict geographic region, which generally sits along the city’s coastline.

The new tax would be a general tax and could allow the city to spend the funds on programs outside the Tidelands Area, such as the youth development, environmental equity and economic inclusion programs proposed under the item. Because it wouldn’t be designated as a special tax, it would also face the lower threshold of 50% of votes plus one to pass.

The tax would not be paid directly by Long Beach residents but by those who have oil interests and mineral rights in the city. City Manager Tom Modica explained that it would affect a “very small group.”

“We [the city] would pay a portion of this. The state would pay the vast majority and some of the other operators that have oil interests and mineral rights would pay this, as well as any of those folks who own little fractions of oil,” Modica said.

While the exact tax amount has yet to be set, Modica said it would likely produce a few million dollars per year, but because oil production has been trending downward, any future funds from this tax would likely fall with time. He estimated that each 10 cents of tax increase equated to about $1 million.

The city could also look at reallocating or increasing existing marijuana taxes to fund equity initiatives, but it’s unclear if a ballot measure would be required to so. Some council members rebuffed the idea of increasing marijuana taxes just months after the council voted to reduce them to spur business growth in the city.

“They want some certainty. They don’t want us coming to the table and reducing, then increasing, and reducing,” Councilwoman Stacy Mungo said. “The same is true for the market around them and the customer base.”

Placing the items on the Nov. 3 ballot could cost the city as much as $1.2 million.

The few members of the public that spoke at Tuesday’s meeting generally supported the idea of investing in equity programs to help offset the pollution and health issues some communities in the city have had to face, but some questioned whether that should come at the cost of drilling for more oil.

Anna Christensen, a representative from the Long Beach chapter of the Sierra Club, likened the proposal to taxes on alcohol and tobacco. She said she thinks that current oil money should be redirected to equity causes, possibly by amending Prop. H to redistribute those dollars to social programs.

“Oil should be left in the ground, and we cannot help but wonder if increasing revenue from drilling will disincentivize the end of oil operations in our city,” she said.

The council is expected to call a special meeting at the end of the month to discuss and vote again. The meeting could come in the last week of July as the last Tuesday of every month is generally held open as a council policy.

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Jason Ruiz covers City Hall and politics for the Long Beach Post.