On The Ballot: A $15M decision on power plant taxes
Measure LB is one of a few ballot measures Long Beach voters will decide in November and city officials say its passage could generate $15 million annually.
Long Beach voters will be asked next month to decide the fate of a decades-old tax exemption for two power plants in the city that produce power for consumers outside of the city by forcing them to pay a fee to the city through Measure LB, something that could bring millions of dollars into the city’s coffers each year.
Nearly every city utility account pays a 5% utility user tax for the ability to have gas pumped into their homes or businesses and those fees generate millions of dollars for the city’s general fund each year.
However, two power plants in Southeast Long Beach operated by AES and the Los Angeles Department of Water and Power that use city gas lines to produce electricity for customers outside of the city have not paid this fee. If voters change that in November, city officials say it could mean roughly $15 million more for the general fund each year, according to an impartial analysis from the city attorney’s office.
That could be helpful in trying to close next year’s projected budget deficit of $30 million, something that Long Beach will have to accomplish without the aid of COVID-19 relief funds, which are expected to end after this year. City officials believe there will be little to no financial impact on Long Beach residents if the measure passes.
Known as Measure LB, the power plant tax issue on the November ballot was one of four that the city polled residents on as it attempts to fill a projected budget deficit in the coming years with new revenue streams.
The three other issues would have seen voters deciding on whether to double the city’s business license fees, increase the fees paid by property owners when they sell their homes or increase the fee charged to Southern California Edison to provide electricity to city businesses and homes. Nones of those issues polled well with residents and were ultimately abandoned by the City Council earlier this year.
Heading into the current fiscal year that began this week, city officials were projecting a $61.5 million deficit over the next five years, which could grow due to a new state law that could see oil revenue dry up sooner as operations potentially end in Long Beach faster than expected.
Those in favor of the measure include local climate activists and City Auditor Laura Doud. Supporters say that a “yes” vote on Measure LB would close the loophole that the power plants have enjoyed for decades while polluting the city by burning natural gas to generate electricity.
No formal arguments against the measure were submitted to the City Clerk’s office before the argument submission window closed earlier this year. Representatives from the two power plant operators had opposed the City Council putting the issue on the ballot.
Southern California Edison, which purchases electricity from one of the plants, had initially threatened that while the power generated there largely goes to accounts outside the city of Long Beach, account holders in the city would be penalized with higher rates if Measure LB passed.
But prior to the council voting to put Measure LB on the ballot, city management said that Edison expressed a willingness to to work with the city if the measure passes. The measure needs more than 50% support to be adopted.
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