The last time Chevron successfully pulled off a multi-million dollar tax reduction, they were smitten with a contrite heart and voluntarily continued to pay Richmond at the former level for three years and provided Richmond a $1 million grant to learn to live on less.

The other half of the $1 million was squandered on a consultant that conducted touchie feelie sessions for the City staff with the objective of changing the culture of spending and entitlement. Unfortunately, what the staff really needed was and audit and some tough love.

Instead of learning how to spend less, the City spent even more and ended up in a fiscal train wreck a few years later.

One way to fend off this impending tax break for Chevron is for the State Board of Equalization to adopt Rule 474 (see Contra Costa Times stories below). You can email three of the five members (Lee, Leonard and Chiang) by clicking on “reply to all.” The other two don’t list their email addresses, but their contact information is available by clicking on the names below. One, Steve Westly, is running for governor.

Who among us likes to pay taxes so much that they would pass up a chance to cut their bill by two-thirds?

Not the oil companies that own four East Bay refineries -- Chevron in Richmond, Shell in Martinez, ConocoPhillips in Rodeo and Valero in Benicia -- which have a combined assessed valuation of $6.2 billion.

Those owners have appealed property tax assessments to try to trim as much as $38.6 million from their combined annual tax bills, which totaled $66.3 million in the 2004-05 tax year.

Successful appeals by the refinery owners could force significant belt-tightening for the county and city governments as well as schools and special districts that depend on property tax collections to fund services and pay debts.

The stakes are large. In Contra Costa County, four refineries -- Chevron, Shell, ConocoPhillips, plus Tesoro in Martinez, which has not appealed its assessment -- account for about 5 percent of the value of taxable property. In Solano County, Valero's Benicia refinery accounts for 2.5 percent of the tax roll.

No doubt, the oil refiners handle a lot of cash. Gasoline prices recently touched $3 a gallon. California motorists continue to guzzle 16 billion of those gallons annually. Most of that fuel flows from 13 steel-plated, flame-spewing refineries that sprawl over shores and hillsides like the chemistry sets of some lost race of giants.

In Contra Costa County, the job of determining the market value of all that hardware belongs to Gus Kramer, a 54-year-old West Pittsburg native who worked in funeral homes before beginning a long career in county government as a coroner and then a real estate agent.

Once the president of the county's public workers union, for the past decade Kramer has managed an assessor's office that now employs 140 people and spends $13 million annually assigning values to the county's 350,000 parcels.

Kramer blasts Chevron and three other refinery owners as "shameless" for seeking to cut their tax bills by as much as 65 percent but is no radical. He even owned Chevron stock until the appeal prompted him to sell to avoid an appearance of conflict.

Some of his beef with the refiners is politics. He observed that a state official "realizes it's better to be on the opposite side of the aisle from the refiners than in their pockets for political purposes." It would be naive to think that Kramer -- who is running for re-election in November -- lacks a similar realization.

But some of the continuing disputes between refiners and Kramer and other local officials who tax them results from the difficulty of determining the market value of those massive assemblages of land and steel.

A basic challenge in taxing property is determining -- or assessing -- how much value is there to be taxed. The California Constitution requires -- with a few twists, such as Proposition 13's limit on annual appreciation until a property changes hands -- that taxable values reflect market values.

But applying that approach to a refinery isn't simple. Assessors face the unenviable task of calculating a refinery's current and future income -- no easy chore in an industry where revenue and profits can be shuffled among a series of transactions spanning from the wellhead to the automobile fuel tank -- to come up with an assessed value.

Consider the case of the Benicia refinery that Valero Energy bought from Exxon in 2000. That $895 million transaction could be seen as a simple measure of market value. It isn't.

Valero bought the refinery as part of a package that included other properties, such as service stations. Disputes about the value of the transaction have festered ever since.

The Solano County Assessor values the Benicia refinery at $963.9 million, but Valero says its facility should be assessed at $600 million, according to documents filed in the appeal.

That $363.9 million disagreement translates into a $4.1 million gap between what the county wants to collect annually in property taxes from the refinery -- $10.8 million -- and what Valero thinks it should pay -- $6.7 million.

Chris Howe, a Valero spokesman, said the company hopes that arbitration can help produce a settlement prior to a formal appeal hearing scheduled for May.

Marc Tonnesen, the acting assessor in Solano County, also holds out hope for a settlement. "Whenever anybody files an assessment appeal, we try to resolve the issue prior to a hearing," he said.

Already the face-off with Valero has cost the government about $500,000. Benicia -- which estimated last year that it could lose $1 million in annual revenue and be forced to refund as much as $3.4 million already collected if Valero wins its appeal -- has agreed to pick up half the tab.

Kramer is in the middle of a bigger fight. He estimates that if no settlement is reached, the county could spend nearly $3 million on fighting three appeals filed in 2004 that are still pending. In the past, most local governments have declined to share any of those costs, and he hasn't asked them to kick in this time around, he said.

Chevron's appeal put the taxable value of its Richmond refinery at $800 million. That year it was on the rolls at $2.47 billion. "Chevron had tax experts review the county's assessment and they concluded that the county's assessment used assumptions that greatly overstated the refinery's market valuation, and therefore the property tax," said Camille Priselac, a company spokeswoman.

Shell's appeal sought a $650 million assessment for its Martinez refinery, while Kramer's number was $1.7 billion. An agreement between Shell and the county set the assessment of that refinery at $1.4 billion through 2003, and the company believes that current market conditions and the closing of an asphalt plant indicate that the assessor's number is too high, said spokesman Steve Lesher.

Lesher said Shell was not seeking to escape its fair share of the local government costs: "As a large facility and large employer, we recognize we are going to have a large tax bill." The company has met with local school districts to discuss how it could "help mitigate the impact of a successful appeal" that could reduce its current annual tax payment by as much as $12 million.

ConocoPhillips' appeal valued its Rodeo refinery at $558.1 million, while the assessor fixed its worth in 2004 at $744.9 million. Spokeswoman Janet Grothe said it is company policy not to comment on pending appeals.

A three-member assessment appeals board appointed by the Board of Supervisors is expected to schedule a preliminary hearing on the Contra Costa refineries' appeals for later this month. If unhappy with the outcome, the refiners can take the issue to state court.

A proposal that would help county assessors fight oil companies' future bids for tax breaks remains stuck in a low-profile state tax panel. The rule would prevent refineries from cutting their tax liabilities by rapidly depreciating some machinery and equipment.

Assessors say that Rule 474 would close a loophole now available to refineries but not to homeowners. Refinery owners say it would take away a protection guaranteed under the rules to implement Proposition 13.

When it came up for a vote in December, only two of the five members of the state Board of Equalization backed Rule 474. Contra Costa Assessor Gus Kramer denounced the board's inaction as an "early Christmas present" to refinery owners.

The proposed rule could strengthen the assessor's hand in already filed appeals and would certainly help tax collectors in future disputes.

Not surprisingly, this talk of new tax rules has refinery owners seething. "There is no issue or problem that needs to be dealt with here," Cris O'Neall, a lawyer for the Western States Petroleum Association, told the board before its vote. "We're somewhat at a loss as to why this rule has been proposed."

But Rick Auerbach, the assessor in Los Angeles County, where the tax rolls include $8.8 billion of refinery property, casts the proposed rule as an issue of simple fairness. Without it, he said in an interview, "you would be giving a special break to the refineries and the petroleum industry that is not available to homeowners."

Elected local assessors set property tax values, but the state constitution gives the Board of Equalization the job of making rules to ensure that local practices don't vary too much. Prop. 13 capped rates at 1 percent and annual assessment hikes at 2 percent.

Businesses got an important break when state officials wrote the law that translated Prop. 13's broad principles into specific rules. That law called for separate assessments of permanently installed business machines and equipment, known as fixtures. That esoteric distinction allowed businesses to write down those fixtures as they lost value due to wear and tear.

That opportunity to depreciate fixtures, when combined with Prop. 13's limit on upward reassessments on land and buildings, put businesses in a sweet spot within the property tax system. Businesses shared with homeowners the benefit of a ceiling on land and building assessment hikes. Businesses got the added benefit of no floor limiting their ability to gradually reduce the taxable value of another class of assets -- fixtures.

But some businesses -- oil and gas wells, mines, geothermal fields -- don't get that depreciation break.

Now, with gasoline prices still hovering in the $2.50-a-gallon range and the media filled with reports of record-setting oil company profits, assessors are pushing to add oil refineries to that list.

The assessors have found an unlikely champion in their battle with the oil companies: Claude Parrish, a Republican from Long Beach who wants to run for treasurer.

Refinery owners have countered by upping the political ante. They proposed an alternate version of Rule 474 that could result in hikes in the assessments of automobile assembly and power plants, food processors, motion picture studios and amusement parks.

That has sparked opposition from other businesses. "We're opposed to the rule being applied to the petroleum industry but we're also concerned that this could be easily expanded to apply to other industries," Kyla Christoffersen, a tax advocate for the California Chamber of Commerce, said at the board's December meeting.

So far, that strategy has worked. At December's meeting, the only supporter for Parrish's proposal was board member John Chiang, whose equalization district includes Los Angeles.

But if, as expected, Rule 474 eventually comes up again at the board, it could have the additional vote required for passage. Member Betty Yee, whose district includes the Bay Area, said in an interview that she voted against the proposed rule in December in order to promote more discussion among the parties about the range of issues affecting refinery assessments. "Ultimately, there still needs to be a rules change," she said.