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Lubrication by Big Oil Ends Richmond City Council Inquiry into Utility Tax Inequity
May 15, 2002

Faced with multi-million dollar deficits in the coming fiscal year, some members of the Richmond City Council expressed renewed interest in reexamining a special provision of the Utility User’s Tax created for Chevron in the 1980’s. All Richmond taxpayers, except one, are required to pay 8% of their utility bills. The one exception is Chevron (now Chevron-Texaco, a $100 billion company). Under the current ordinance, Chevron can decide annually whether to calculate their tax as an arbitrary lump sum (the “cap” ) or to pay the same 8% assessed to every other Richmond taxpayer. Chevron has always chosen the “cap,” maintaining that it has been more costly to them but has allowed them to preserve the secrecy of how much energy they use – a “trade secret,” they say. In fact, any information about any taxpayer’s utility usage is confidential, making Chevron’s excuse ring hollow. For the full text of the ordinance, see http://bpc.iserver.net/codes/richmond/index.htm.

For the last several weeks, an initiative has been floating around the City Council to hire an expert consultant to determine if Chevron would pay more or less tax under the “cap” provision compared to the percentage calculation. The idea was that if Chevron would pay more under the percentage calculation method, the City Council may want to consider a ballot measure to eliminate or raise the cap, effectively enhancing the City’s revenue without affecting any taxpayer except Chevron.

On a 5-1-3 vote, the City Council last night agreed not to pursue the inquiry. Some of the reasons given were as follows, with my rebuttal in caps:

1. We already received information from Chevron that they were paying more under the cap than they would have paid under the percentage calculation. That should satisfy us. We believe them.
IT IS TRUE THAT CHEVRON HAS PRODUCED FIGURES INDICATING THAT THEY VOLUNTARILY PAID MILLIONS MORE UNDER THE “CAP” THAN THEY WOULD HAVE HAD TO PAY UNDER THE PERCENTAGE CALCULATION. THE QUESTION IS WHETHER THE CITY SHOULD RELY ON THE CHEVRON-PROVIDED FIGURES WITHOUT EXPERT THIRD-PARTY VERIFICATION.

2. If we eliminated the cap, Chevron’s tax payments would fluctuate wildly from year to year, making budget planning impossible.
CURRENTLY, THERE IS NO REQUIREMENT THAT CHEVRON PAY UNDER THE “CAP” CALCULATION. THEY MAKE THAT CHOICE ANNUALLY. THEY COULD CHANGE TO THE PERCENTAGE METHOD AT ANY TIME, THUS INTRODUCING THE SAME UNCERTAINTY.

3. Placing a ballot issue on the November ballot to modify the utility tax would require an “emergency” and support from nine members of the City Council. Those nine votes do not exist.
WHAT IF WE FOUND ELIMINATING THE “CAP” COULD PROVIDE SUBSTANTIAL ADDITIONAL REVENUE, AND ONLY ONE RICHMOND TAXPAYER, CHEVRON, WOULD BE AFFECTED? WOULD THE CITY COUNCIL FOREGO THAT OPPORTUNITY? I THINK NOT.

While I respect the positions and arguments of my City Council colleagues, I continue to have a profound disagreement with the thin majority (5-4) that wants to avoid a further examination of Chevron’s Utility User Tax potential liability.

While I have no knowledge of how effective it has been, I do know that Chevron has launched a heavy lobbying campaign to deter the City Council from considering any changes to the utility tax. Chevron wields considerable political power in Richmond and has a long history of controlling political decisions that would affect the company’s profitability.

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