Critically Speaking: Oil is not part of Long Beach's future

But higher taxes and fees could be.

Critically Speaking: Oil is not part of Long Beach's future
A man and his dog walk through Willow Springs Park in Long Beach Wednesday, June 5, 2024. Photo by Brandon Richardson.

Long Beach is an oil town.

I should say, it will be for a few more years, but its status as one of the largest producers of “black gold” in the state has been waning.

Eventually, the oil will be tapped out and a pending state law threatens to speed up the end of oil in the city, which could create a massive hole in the city’s budget.

Officials say that the new law (SB-1137) would hasten the juice no longer being worth the squeeze and move up the event horizon of oil running out from 2035 to 2030. So, in anticipation of potentially losing tens of millions of dollars annually over the next few years and into the foreseeable future, Long Beach is looking at raising taxes.

The good news is you’ll likely have a say on whether they pass.

Next Tuesday the City Council will be presented with a variety of options that could be put on the ballot to help “raise revenue,” which, if you haven’t figured out by now, means increased fees, fines and taxes — the lifeblood of any government.

Some seem innocuous, like the ending of the exemption that some power plants in Southeast Long Beach have enjoyed for decades. This would require a change to the city’s municipal code and would have “virtually no impact” on ratepayers in the city, according to a city report.

Jason Ruiz has been on strike from the Long Beach Post since March 21, yet he’s still covering city hall without pay. Thank him for his reporting.

That change could generate up to $15 million annually.

A potentially $21.5 million idea would require the city to raise the fees it charges to electricity providers — that would be Edison in this case — to have the exclusive rights to provide energy to residents.

The memo says the current rate is 1.66%. If Long Beach raised that rate to 5% it could create a pretty sizable chunk of cash each year but it would come at the expense of ratepayers like you. Edison is likely to pass that cost along to you and the city estimates it would raise your bill by about $2.47 per month.

Interestingly enough, the increase would be lower for households who use less energy, which makes sense but is out of step with the recent vote by the California Public Utilities Commission to create new flat fees for each user based on income and set rates lower for households who use more energy.

The memo even looks at raising business licenses (by double) to generate another $15 million per year. Again, that would likely be passed along to consumers and could negatively affect some small business owners.

What could easily be the most controversial suggestion is the idea to increase the city’s real property transfer tax, or the fee that people selling property are required to pay the city once a sale is finalized.

According to the city’s municipal code, the current rate is about 27 cents for every $500 of value, or approximately 10% of what the city of Los Angeles charges, and the City Council could consider aligning with it. That could generate $16 million annually, according to the city. It would also be subject to the ebbs and flows of home sales.

The city’s most recently adopted budget shows that the real property transfer tax accounted for between $2 million and $3 million over the past few years.

A more tempered approach would apply the LA rate to properties that sell for over $1 million and a smaller ($3.30 per $1,000 of value) rate to less expensive properties. That could raise about $12 million annually.

The average single-family home sale under these conditions would require a payment to the city of between $1,889 and $3,864 by the seller.

November could be an expensive election for everyone between the tax proposals the council could put on the ballot and the property tax increase that would result if Long Beach City College’s proposed bond measure is passed by voters.

Then there’s the extension of the countywide Measure H homelessness tax, which would come with a special designation for Long Beach, because if it passes it would elevate the city to having the highest sales tax rate in California.

It may be time to start drilling down into your backyard to see if there’s anything valuable buried.

What happened this week

The Long Beach Utilities Commission voted Thursday to raise rates for water, sewer and gas for the upcoming budget year and that means your monthly bill is likely to go up by at least $9 per month if you’re the typical single-family home. The increase to water was the largest and comes despite years of water consumption in the city trending down. The department blames the increasing cost of imported water — Long Beach gets most of its water from underground wells in the city — as well as the rising cost of materials like pipe, concrete and electric vehicles, something the department needs to start rolling out to comply with new state law. Want to know more about how the rates will affect you? Read my story here.

Something to keep an eye on

Another motel will be converted to temporary housing for the homeless with the Vagabond Inn on Alamitos Avenue being the most recent addition to the city’s collection of inns and motels that it’s using to combat people living on the streets. The one-year lease to house people at the 60-room inn was approved by the City Council Tuesday night and like previous deals struck by the city and the county, it’s not going to be cheap. The city has agreed to pay $110 per night per room — that’s about $200,000 per month — to use the facility for at least the next year and people who are eligible to stay there are expected to come from the encampments that are persistent around Lincoln Park, Billie Jean King Library and The Promenade. The city says the goal is to get as many people off the streets and into permanent housing and it’s setting aside part of the $5.3 million grant it’s using to pay for this lease to provide rental assistance to people who end up in other housing after staying at the Vagabond Inn.

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