Response to Auditor's Fiscal Impact Statement

Protect Monterey County Responds to Fiscal Impact Statement by County Auditor

The Monterey County Auditor has authored a fiscal impact statement concerning the effects of Measure Z on County revenues and expenditures.  Unfortunately, the Auditor relied on an inaccurate and deeply flawed economic report commissioned by the oil industry rather than conduct his own independent research.  Inexplicably, the Auditor did not consider relevant economic data reported in official County publications, or heed the advice of County Counsel in an Impartial Analysis of Measure Z.



1. The Auditor falsely states that many oil extraction methods currently employed . . . in the County would be banned by Measure Z.

Measure Z expressly does not prohibit oil and gas operations from existing oil and gas wells in the County, which number over 1,500.”  (Measure Z, Sections 1(B) and 2(A), LU-1.23-(1).

Measure Z expressly does not prohibit “steam flooding, water flooding, cyclic steaming,” the oil extraction methods currently employed in the County.  (Measure Z, Section 2(A), LU-1.21(2).)

 

2. The Auditor wrongly assumes that Measure Z will cause a shutdown of current oil and gas operations in Monterey County.

Measure Z expressly allows existing oil and gas operations to continue.  The Measure does prohibit the drilling of new wells, but according to the Impartial Analysis of Measure Z by the Monterey County Counsel, the prohibition applies only to drilling wells exceeding the number operating at the time the measure becomes effective, and would permit replacement wells.”

The oil corporations currently inject more than 10.3 gallons of toxic wastewater into protected aquifers under the Salinas River every day, 3.8 trillion gallons every year.  Measure Z requires the oil corporations to clean toxic wastewater instead of disposing of it by injection into underground aquifers.  According to the Impartial Analysis of Measure Z by the Monterey County Counsel, the measure allows Waste water to be treated and then injected or impounded in ponds and allowed to percolate.”

 

3. The Auditor falsely states that Measure Z will result in fewer jobs (approximately 730) and wages in the oil services industry and related consumer spending, resulting in decreases in sales and other taxes related to the industry.

Measure Z protects current oil jobs and preserves county revenues because it allows continuing oil and gas production from existing wells and replacement wells. Measure Z will increase jobs and add to County revenues because wastewater treatment facilities and operations will be used to dispose of the toxic waste created in oil production rather than by injection into ground water supplies.

Measure Z only regulates oil and gas extraction. It has no effect whatsoever on the distribution and sale of refined petroleum products like gasoline sold at more than 100 service stations in the County.  According to Monterey County reports, the total employment in mining, quarrying, and oil and gas extraction was 267 jobs in 2015.  (Economic Overview, Monterey County, California (May 4, 2016), p. 8).  A study commissioned by the oil industry itself reports that in 2012, there were only 121 jobs in oil and gas extraction. (California’s Oil and Gas Industry in 2012, p. 36.)

There are no sales taxes paid for oil and gas extraction activities in Monterey.  The producers only pay property taxes.  The $7.9 million in property taxes paid by oil producers in 2015-2016 was less than 1% of the $930.4 million in total Monterey County revenues.  (County of Monterey, Comprehensive Annual Financial Report (FY 2014-2015), p. 7.)

4. The Auditor incorrectly suggests that Measure Z will result in unconstitutional “takings” of property and hundreds of millions of dollars in damage claims against Monterey County.

Measure Z cannot possibly result in successful regulatory “takings” litigation because it allows continuing oil and gas production from current and replacement wells.  Moreover, Measure Z allows the County to exempt a property from Measure Z in order to avoid any “takings” liability.  A measure similar to Measure Z was passed by San Benito County voters in 2014 (Measure J). The oil industry threatened “takings” lawsuits and actually sued San Benito County after passage of Measure J.  The lawsuit had no merit and was eventually withdrawn by the oil industry in order to avoid an adverse legal precedent.  San Benito County paid $600 in filing fees defending this litigation.


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