Chamber Joins with City Leaders to Find Solutions to Address Public Safety Pitfalls

Business leaders join with City Auditor Laura Doud & Councilman Gary DeLong to beef up Police and Fire

Upon the recommendation of the Chamber’s Government Affairs Council (GAC) the Long Beach Area Chamber of Commerce Board of Directors votes to endorse the “Police and Fire Public Safety Oil Production Act,” which will be included on the upcoming May 1st ballot. The proposed measure increases the fee charged to oil producers from the current 15 cents to 40 cents per barrel of crude oil pumped from wells within the city. This fee has not been adjusted to reflect changing market rates for oil and oil production since 1990. The measure will generate an additional 2 million dollars in revenue, per year, to help hire more police and firefighters in Long Beach.

Upon making the announcement, Chairman of the Council Lori Lofstrom said: “the Police and Fire Public Safety Oil Production Act is fair to all concerned, including the producers. In light of the fact that our member oil producers were active participants in the discussions leading up to the proposed measure, we couldn’t resist signing on.” The Act is a result of negotiations between oil producing members of the Chamber as well as City Auditor Laura Doud and Councilmember Gary DeLong. “The Chamber supports this Act because it is fair to business, and it is critical to our public safety needs. All things considered, this Act is what is best for the citizens of Long Beach,” Ms. Lofstrom added.

“We are pleased to join forces with City Auditor Doud and Councilmember DeLong to promote a measure that will help keep the streets of Long Beach safe while at the same time set the current fee to market rate,” said Chairman of the Board of Directors Byron Schweigert. “Public Safety is a top concern for the business community of Long Beach, and this Act will ensure that vision while still allowing the city to develop and succeed in a manner that keeps our city oil producers competitive,” concluded Mr. Schweigert. In voting to support this measure, the Chamber sided with the public safety of the residents of Long Beach. “What this really says about the Chamber is that we are serious about improving the quality of life for all citizens of Long Beach. At the same time, our support for this Act solidifies our role as a job-creating organization, as the revenue from this fee will put more police on the streets,” Mr. Gordon concluded.

Oil Production Tax Background

City Auditor Laura Doud, working with Mayor Bob Foster, Councilmember Gary DeLong and appropriate stakeholders (including oil producers) a determination was made that Oil Production Tax (OPT) should be updated . Discussions held to determine tax rate that is fair, equitable and appropriate for all parties.

The City Code mandates a set fee for “every person conducting, managing or carrying on the business of oil from any well located in the City at $0.15 per barrel.” This fee was set in 1990. In FY 2006 oil production was 14,882,817 barrels, generating $2,232,423 in revenue to the City.

The Oil Production Tax (OPT) is a tax that is paid by the companies who are producing oil from the oil resources in the City of Long Beach. This is not a tax paid by consumers. Oil that is extracted in Long Beach is not high enough quality for gasoline – mostly “heavy sludge” used for industrial purposes.

Currently, Long Beach’s OPT rate is significantly lower than that of neighboring cities:

City                       Tax per Barrel           Estimated Production     Est. Revenue

Beverly Hills                  $0.34                         193,000               $65,620

Huntington Beach           $0.31                         935,000               $291,720

Inglewood                     $0.22                         3,100,000            $682,000

Santa Fe Springs            $0.20                         935,000              $187,000

Seal Beach                    $0.58                         193,000              $112,210

Signal Hill                      $0.60                         540,000              $327,240

Long Beach                  $0.15                         14,882,817                   $2,232,423

The Council approved the Auditor’s recommendation that the following be placed before the voters during the May 1, 2007 special election:

1.      A flat fee tax per barrel of $0.40 be mandated; and,

2.      Future rate adjustments to the OPT should be tied to the Consumer Price Index annually.