Judge declares Richmond's Measure T unconstitutional

By Katherine Tam
Contra Costa Times

Posted: 12/17/2009 03:26:40 PM PST

Updated: 12/18/2009 05:48:31 AM PST

Richmond's voter-approved manufacturers fee has been ruled unconstitutional, meaning city coffers will not get a hoped-for annual infusion of at least $16 million.

Contra Costa County Superior Court Judge David Flynn sided with Chevron, which would pay the lion's share of the fees, in concluding that Measure T is discriminatory. Wednesday's ruling means the city cannot legally collect the money.

"While it would appear that the City of Richmond is capable of imposing a licensing or 'doing business' tax upon the activities in Richmond of Chevron, and that such tax may well have considerable similarity to the tax voted upon by the voters, the tax scheme that has been selected and put into place cannot be enforced," Flynn wrote.

Approved in November 2008, Measure T charges manufacturers a quarter-percent of the value of the raw materials they use each year if it is more than the annual business license fee they paid before the initiative was enacted. The measure was projected to generate at least $16 million a year for road repairs, job training and other public services.

Chevron sued the city in February. The refinery paid about $21 million in business license taxes in April while the lawsuit was pending. The city hasn't spent the money, officials said, because it was waiting for a ruling. Flynn stated that the city has authority to collect business taxes under laws it had before Measure T, and suggested that officials could refund what the refinery overpaid.

City Attorney Scott Dickey said Thursday that officials are reviewing the court decision and will discuss their options.

Chevron is pleased with the ruling, said refinery spokesman Brent Tippen; the company found Measure T to be "a punitive measure not only for Chevron, but for business in Richmond."

In court hearings this year, Chevron argued that Measure T puts businesses with manufacturing operations in one city and offices in another at a competitive disadvantage, in part because they must pay taxes or fees in both cities. In contrast, a business with operations solely in Richmond would pay just the Richmond fee.

Richmond has the authority to impose a fee for the privilege of doing business here, officials said. And it was within its authority when the tax collector issued an enforcement policy authorizing businesses operating partly in Richmond to pay fees proportionate to their operations in the city, they said.

Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam.