September 18,
2006
Southwest California Legislative Council Opposes Proposition
90
Today the Southwest California Legislative Council (SWCLC)
voted unanimously to oppose Proposition 90, citing risks to
public safety and major public works projects. The SWCLC is
comprised of the Temecula Valley, Murrieta, and Lake
Elsinore Valley Chambers of Commerce.
SWCLC Chair Joan Sparkman noted that over 140 organizations,
including the California Chamber of Commerce, the California
Business Roundtable, and Inland Empire Economic Partnership
have already voted to oppose Proposition 90.
“This measure goes too far,” Sparkman said. “It adds
uncertainty to needed infrastructure projects and could cost
taxpayers billions of dollars.”
The SWCLC action adds one more business voice to the huge
coalition of environmental, business, education, labor,
public safety and local government organizations opposing
Proposition 90.
About Proposition 90
This measure
amends the California Constitution to require government to
pay property owners for substantial economic losses
resulting from some new laws and rules and will limit
government authority to take ownership of private property.
This measure would also make significant changes to
government authority to take property, including:
1. Restricting the purposes for which government may take
property
2. Increasing the amount that government must pay property
owners
3. Requiring government to sell property back to its
original owners under certain circumstances.
Government can take property to:
1. Build public roads, schools, parks, and other
government-owned public facilities.
2. Lease it to a private entity to provide a public service
(such as the construction and operation of a toll road).
3. If a public nuisance existed on a specific parcel of
land, government could take that parcel to correct the
public nuisance.
4. Government could take property as needed to respond to a
declared state of emergency.
Government cannot take property to:
1. To Transfer it to Private Use. The measure specifies that
government must maintain ownership of the property and use
it only for the public use it specified when it took the
property.
2. To Address a Public Nuisance, Unless the Public Nuisance
Existed on That Particular Property. For example, government
could not take all the parcels in a run-down area unless it
showed that each and every parcel was blighted.
3. As Part of a Plan to Change the Type of Businesses in an
Area or Increase Tax Revenues. For example, government could
not take property to promote development of a new retail or
tourist destination area.
In any legal challenge regarding a property taking,
government would be required to prove to a jury that the
taking is for a public use as defined by this measure. In
addition, courts could not hold property owners liable to
pay government’s attorney fees or other legal costs if the
property owner loses a legal challenge.
May 24, 2006
Southwest California Businesses Oppose Effort to Secure Gas Tax Proposition for
November 2006 Ballot
The Southwest California Legislative Council is opposing the effort to secure the Oil
Severance Tax Initiative for the November 2006 ballot. This
proposed initiative establishes a program intended to reduce oil
and gasoline use, with research and production incentives for
alternative energy, alternative fuel vehicles, energy efficient
technologies, and for education and training.
Funding will be provided by a tax of 1.5% to 6%, depending on
oil price per barrel, on producers of oil extracted in
California. Prohibits producers from passing tax on to
consumers. Specifies spending $4 billion in 10 years
administered by California Energy Alternatives Program
Authority.
The SWCLC is a regional
business advocacy coalition of the Temecula Valley
Chamber of Commerce, Murrieta Chamber of Commerce,
and Lake Elsinore Valley Chamber of Commerce.
Its mission is to provide a basis for the
three chambers of commerce
to act on local, state and federal government issues
to secure a favorable and profitable business
climate for the region.
In
Depth
California onshore
and offshore oil production totaled 268 million barrels of
oil—approximately 733,000 barrels per day. Oil production
(excluding federal offshore production) represents approximately
12 percent of U.S. production. California is the third largest
oil-producing state, behind Texas and Alaska. (2004 data)
Oil production in California peaked in 1985, and has declined,
on average, by 4 percent to 5 percent per year since then.
California oil production supplies approximately 42 percent of
the state’s oil demand, with Alaska production supplying
approximately 22 percent, and foreign oil supplying about 36
percent.
29.8 million barrels were produced in Los Angeles and Orange
Counties comprising roughly 13% of state’s 2005 total. Virtually
all of the oil produced in California is delivered to California
refineries.
In 2004, the total supply of oil delivered to oil refineries in
California was 655 million barrels, including oil produced in
California as well as outside the state. Of the total oil
refined in California, approximately 67 percent goes to gasoline
and diesel (transportation fuels) production.
In 2005, the production from the Wilmington Oil Field (Long
Beach) totaled 14.9 million barrels (5th largest field in
California).
Oil producers pay the state corporate income tax on profits
earned in California. California’s corporate income tax rate is
among the highest of the top producing states. Texas, in fact,
does not have a corporate income tax at all which provides
producers a competitive advantage over California in trying to
attract capital investment. California producers also pay a
regulatory fee to the Department of Conservation (regulates oil
production in the state) that is assessed on production, with
the exception of production in federal offshore waters.
California’s taxes on oil producers are among the highest in the
nation. Currently producers pay a fee of 5.3 cents per barrel of
oil produced which will generate total revenues of $13.8 million
in 2005-06.
Fiscal Impact
Raises fuel costs
for consumers. This initiative is a hidden tax which could cost
consumers and businesses hundreds of millions of dollars every
year in higher gasoline, diesel and jet fuel prices and higher
prices for goods and services provided by businesses that rely
on petroleum products for production or transportation purposes.
Its promoters made an attempt at doing so, prohibiting an oil
producer – or any industry – from passing through the higher
costs of doing business could be unconstitutional and is likely
to lead to costly litigation.
The California Taxpayers’ Association opposes this new fuel tax
because Californians already pay the third highest taxes on
gasoline in the country.
California already
faces a growing gap between ever-escalating demand for crude oil
and gasoline and our current capacity to produce it. Placing an
additional tax on California crude oil will discourage in-state
production investments, making us even more dependent on imports
– the very opposite effect initiative proponents claim as their
goal.
Since the tax could not be applied to imported crude oil,
foreign supplies would in essence prospectively gain a market
advantage over locally and in-state produced crude. Placing
further reliance on imports could potentially exacerbate
existing air quality issues relative to the region’s ports.
A large portion of these new taxes would go into the hands of a
self-perpetuating huge new bureaucracy, with little
accountability and oversight. The measure mandates this new
agency to spend $4 billion within ten years – whether it can
justify those expenditures or not. It allows members of the new
agency to hire unlimited staff and make political appointments
of commissioners who will also be paid at taxpayer expense.
Higher business costs imposed by this tax could cost
Californians good-paying jobs and benefits, and harm the state’s
economy by discouraging new businesses from investing here.
The Legislative Analyst in a report dated January 25, 2006
reported the measure would raise between $200 million to $380
million in new tax revenues for this newly created
special-purpose agency while resulting in the following:
General Fund Losses: The LAO reported that income tax revenues
from oil producers that flow into the state’s General Fund would
be lower because the severance tax would be deducted from earned
income on oil producers.
Reduction in Local Property Tax Revenues: The LAO stated “local
property taxes paid on oil revenues would decline under the
measure…” The report stated that the loss could result in a
revenue decline for K-14 school and community college, which the
state may be required to offset in some cases. The Analyst also
notes the measure would result in non-reimbursable local
government costs (of an unknown amount) for administering the
new act.
Potential Reduction in Transportation Funding: According to the
LAO, tax revenues from gasoline, diesel excise and sales tax
could be reduced if this measure decreases the use of oil for
transportation fuels. Currently these tax sources are a major
source of state transportation funding.
Reduced Economic Activity and Lost Jobs: According to the LAO,
this measure could further affect state and local government
revenues by reducing economic activity and causing job losses
due to increased costs for oil production and imposition of
hundreds of millions in new taxes.
May 24, 2006
Southwest California Businesses
Support Transportation Funds
The Southwest California
Legislative Council SUPPORTS the effort to place the “Close
the Proposition 42 Loophole Initiative” on the November 2006
ballot.
The SWCLC is a regional
business advocacy coalition of the Temecula Valley
Chamber of Commerce, Murrieta Chamber of Commerce,
and Lake Elsinore Valley Chamber of Commerce.
Its mission is to provide a basis for the
three chambers of commerce
to act on local, state and federal government issues
to secure a favorable and profitable business
climate for the region.
Summary
A broad-based coalition of business, labor, local
government, and community leaders is collecting signatures
to qualify a constitutional amendment for the November 2006
ballot.
The passage of this measure is intended to close the Prop.
42 loophole, uphold the will of voters, and ensure once and
for all that the sales taxes paid at the pump are used for
transportation improvements.
This measure would prevent the Governor and Legislature from
diverting the sales taxes on gasoline to non-transportation
expenses.
It will also require the State to reimburse the $2.5 billion
in funds previously diverted. It responsibly allows 10 years
for repayment to avoid any immediate fiscal impact.
Background
In 2002, nearly 70% of California voters overwhelmingly
passed Proposition 42 that dedicated the existing state
sales tax on gasoline to fund transportation projects like
congestion relief, road repairs, transit needs, and safety
improvements.
However, a provision was included in Prop. 42 that allows
the legislature and Governor to divert funds to
non-transportation expenses. What was only intended for
emergency fiscal issues has been abused repeatedly. The will
of the voters is not being upheld.
Two out of the last three budget years’, the sales tax on
gasoline has been diverted to fund non-transportation state
expenditures in the State General Fund.
Nearly $2.5 billion in these gas taxes has been diverted to
non-transportation expenses since 2002. As a result, state
and local agencies have had to delay or stop many critical
safety improvements, congestion relief projects, road
repairs and other transportation needs.
In fact, California has the worst roads in the nation,
according to a recent report by the Road Information
Program. Three out of 10 of the state's overpasses and
bridges are structurally deficient or functionally obsolete.
And approximately half - 49 percent - of California's urban
freeways are considered congested.
This transportation crisis is threatening our economy and
the safety and quality of life of every Californian.
Features
The initiative simply requires retention of funds earmarked
for the Transportation Investment Fund in the General Fund
for use unrelated to transportation after 7/1/08.
Requires repayment by 6/30/17 of transportation funds
retained in the state general fund in years prior to
2007-08.
Eliminates General Fund borrowing of specified
transportation funds, except for cash flow purposes.
Repayment of funds would be required within 30 days of
adoption of the budget.
Fiscal Effect
Legislative Analyst and Director of Finance estimate that
there will be no revenue or cost effects. Increases
stability of funding to transportation in 2007-8 and
thereafter.
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