With new restrictions on oil production looming, the city of Long Beach could soon lose as much as $20 million per year in revenue from drilling and extraction. To fill that deficit, city officials last week publicly floated the idea of asking voters to approve a new tax.

The idea came up at a March 19 meeting where City Council members were given a picture of Long Beach’s long-term budget prospects.

Projections show a $23.5 million deficit next year, which the city plans to plug with leftover COVID-19 relief funds. But that emergency money will run out soon, leaving the city potentially staring down a nearly $36 million deficit in 2026 — something that’s going to require action, according to City Manager Tom Modica.

“We know right now that the projected shortfall isn’t going to get resolved without interventions,” he said.

One remedy City Council members could consider is a ballot measure that would ask voters to approve a new tax to help offset the loss of oil revenue. Modica said the City Council could be briefed on the idea in late April.


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It’s unclear what type of tax would be proposed, but it’s not likely to be a sales tax. Long Beach is already at the local limit.

Long Beach has been planning for the move away from oil for years, pledging to divest by 2030, but some things out of its control sped up the process.

If voters in November don’t repeal a law that bars new oil wells from being drilled near homes, schools, playgrounds and other sensitive sites, Long Beach will immediately take a hit to its revenue. The city has said that hit could be as large as $20 million per year.

Oil has helped fund public safety services, beach improvements and large undertakings like the Belmont Pool replacement project. Now, though, as oil money fades away, the city has proposed using it only for one-time expenses, not ongoing costs like salaries for city employees.

Mayor Rex Richardson said the move away from oil is going to be painful but necessary.

He said the council hasn’t yet decided whether to ask voters about a new tax, but, he said, if oil revenue is going away, it’s time for “an honest conversation” about whether the city is going to reduce services or find a way to replace that money.

Richardson has proposed other ways to grow the city’s budget, announcing plans to boost industries including tourism and hospitality with a plan to build a temporary amphitheater near the Queen Mary to help attract concerts and events.

He also hopes to court industries like aerospace, health care, logistics and education as part of his Grow Long Beach plan to diversify the city’s tax base.

Long Beach has made “significant” investments in this plan, but it’s too soon to project how effective they’ll be, city staff said in their March 19 presentation to the City Council.

Jason Ruiz covers City Hall and politics for the Long Beach Post. Reach him at [email protected] or @JasonRuiz_LB on Twitter.