HomeMy WebLinkAboutMINUTES - 05011984 - 1.33 s
TO: BOARD OF SUPERVISORS
FROM: C. E. Dixon, Interim County Administrator Contra
Costa
DATE: April 25, 1984 County
SUBJECT: AB 3 Oil Severance/Income Tax Relief
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION: Acknowledge receipt of report from County Administrator's Office.
BACKGROUND: On March 13, 1984, your Board requested this office to review and make
recommendation on the oil severance tax bill , AB 3, (copy of the Legislative Counsel 's
Digest attached).- This bill , as amended, has been passed by the Assembly and is
scheduled for hearing before the Senate Revenue and Taxation Committee on May 2, 1984.
The following summary is provided by the author of the bill , Assemblyman Tom Bates:
"AB 3, as passed by the Assembly and amended on January 26, provides for
a 6% severance tax on the gross value of oil produced at the wellhead
in California. AB 3 also enacts across-the-board personal income tax
relief which totals $400 million, by indexing the brackets, increasing
the standard deduction, and increasing the personal credit.
The severance tax would raise approximately $400 million in a full year
of operation, while the income tax reductions would provide an equivalent
amount of tax relief. As a result of providing equal amounts of new revenues
and tax reductions, the bill requires a majority vote of each house of the
Legislature for passage." .
This is a State revenue measure designed to reduce income taxes and the loss of revenue
to be offset by initiation of a new oil severance tax. This bill would benefit residents
of the County by reducing State income tax rates. This would be offset, in part, by
increases in cost of petroleum products resulting from "pass through" of taxes collected
from the producers. As of 1981 , Contra Costa County had 42 wells producing 152,289
barrels of oil . It is unlikely that the State will collect this tax from these wells
as there is an exemption of 100 gallons per day of oil (first 36,500 per year). The
average production of each of the 42 wells in Contra Costa County is 417 barrels per
year; well below the 36,500 minimum base.
No specific estimate is available of the reductions in State income tax payments from
residents of the County resulting from this legislation. However, a rough approximation
of $13.9 million for Contra Costa County can be estimated based upon the figure of
$390 million statewide reduction (as given by the author of the bill ) and that Contra
Costa County contributes 3.56 percent of all income taxes paid to the State (1981
returns).
Because AB 3 does not directly affect the management of county government, we have not
made a staff recommendation. The Board may, as a policy matter, wish to adopt a position
on the bill .
CONTINUED ON ATTACHMENT: X YES SIGNATURE: &44e
__X._ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
___X_APPROVE OTHER
SIGNATURE(S) 4r4/�_?7 ---
ACTION OF BOARD ON May 1 . 1984 APPROVED AS RECOMMENDED OTHER
The Board this day received information from Assemblyman Tom Bates
on AB 3 . The County Administrator is also requested to reviev, this
additional information.
VOTE OF SUPERVISORS
UNANIMOUS (ABSENT _ ) I HEREBY CERTIFY THAT THIS IS A TRUE
AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN
ABSENT: ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD
OF SUPERVISORS ON THE DATE SHOWN. 00 159
CC: County Administrator ATTESTED
County Auditor J.R. OLSSO , COLINTY CLERK
Ount reasur AND EX OFFICIO CLERK OF THE BOARD
sse .b yman efom Bates
M382/7-e9 BY - , DEPUTY