|Chevron Tax Break
Would Cut City Funds
May 30, 1997
WEST COUNTY TIMES
RICHMOND SAYS LOSS MAY REDUCE SERVICES
Friday, May 30, 1997
RICHMOND If Chevron gets a break on its property tax bill, the city budget could face a $4 million hit.
That has city officials nervous they'll have to replace lost money or reduce city services.
Chevron wants the value of its land trimmed by nearly half in an effort to cut its $24 million property tax bill. Right now, the company's Richmond property is valued at $2.1 billion. Property tax is based on that amount.
The city gets about 28 percent of Chevron's property tax. This year, the city's cut totaled $7 million. The rest goes to the county, state and special local taxing districts.
"The bottom line is everyone in Richmond is going to have to pay more because Chevron is going to pay less," Councilmember Tom Butt said. "Either that or the quality of life is going to drop."
Although negotiations between the county and Chevron are only beginning, County Assessor Gus Kramer said he understands city worries.
"Obviously it's a significant part of their tax base," Kramer said. "If I were a council member in Richmond, I would be concerned."
City officials have yet to address how they might replace the lost money. Marla Taylor, the city's acting finance director, said the proposed $68 million 1997-98 city budget, unveiled Wednesday night, does not reflect any loss from the city's share of Chevron property taxes.
The city budget is already tight, and City Manager Floyd Johnson said a $4 million loss isn't easily replaced even in the best of economic circumstances.
Johnson would not guess what services would be cut if the city takes a big hit.
"We, of course, would have to re-examine our priorities," he said. "I don't want to speculate where those cuts would come from. I don't want to arouse the ire of folks unnecessarily."
Without knowing the outcome of the appeal, budgeting for the next fiscal year gets more difficult. Although it's unlikely that the Chevron re-assessment will be completed this calendar year, it involves 1996 and 1997 taxes. Chevron could be eligible for refunds if the assessment decreases, Kramer said. The city would have to pay a portion of the refund.
Chevron is appealing the assessed value on which its 1996 property tax bill was based. Such appeals are legal for any home or property owner.
Three years ago, Shell's Martinez refinery sought a 50 percent property tax cut, setting off a series of appeals in the local refinery industry. Shell and Tosco have argued that their aging facilities, including the 100-year-old Tosco refinery in Rodeo, have decreased in value.
Until now, Chevron had not joined in the property tax-reduction fight. The company's appeal coincides with a $1 billion retooling of the refinery to meet state laws on cleaner-burning gasoline.
Butt said Chevron officials recently assured the city it wouldn't appeal its tax bill. Chevron spokesman Hal Holt said that was before refinery officials saw assessments at other refineries in the area and re-evaluated its situation.
"I would say that was a couple of years ago," Holt said. "Times change."
City Manager Johnson agreed it was at least a year ago when Holt told him Chevron had no plans to seek a re-assessment. Johnson said Holt made no promises Chevron wouldn't reconsider.
County Assessor Kramer said the appeal process is difficult. It took three years to reach an agreement with Shell on its Martinez refinery, he said.
"It's not like looking in a neighborhood and comparing houses," he said. "It gets quite complicated. If you could see the paperwork on this, it would choke a horse."
If negotiations bog down, Kramer said he may hire a specialist, at a cost of about $250,000, to appraise the Richmond refinery. The assessor's office probably would pass on some of the costs for the consultant to the city, he said.
Previous negotiations between the county and Shell resulted in Shell getting a reduction far smaller than first proposed. But anything could happen with Chevron, Kramer said.
"We have seven (refineries) in the county, and all of them are different," he said.
Butt complained that Richmond has too often made exceptions on regulations for Chevron, such as granting it a different rate structure for the city's utility user's tax.
"They have controlled government operations here and directed public policy to their benefit forever," Butt said.
Butt acknowledged he has been accused of trying to run Chevron out of town, but called that nonsense.
"I have no intentions of doing anything that would make Chevron shut down any of its operations," Butt said.