LADWP Approves Controversial $241M Transfer Which Critics Call ‘Theft From Ratepayers’
By Staff Reports, KCBS TV-2 Los Angeles, CA
November 28, 2017
LOS ANGELES (CBSLA) – A controversial annual transfer of hundreds of millions of dollars from the Los Angeles Department of Water and Power to the city’s general fund was unanimously approved Tuesday by the agency’s governing board.
The city has a longstanding policy of transferring 8 percent of the LADWP’s revenue to the general fund to help balance the city’s budget. The payment has routinely been around $250 million for years, but critics have argued that it amounts to an illegal tax.
The city has been close to settling several lawsuits over the annual payment, which would allow it to continue but at a reduced rate, and this year’s approved payment of $241.8 million reflects the proposed settlement agreement level, which is down about $25 million from last year.
The Los Angeles Board of Water and Power Commissioners approved the item with little discussion.
After the president of the DWP Advocacy Committee — that represents neighborhood councils in matters related to the department — raised questions about the legality of the transfer during the public comment period, Assistant City Attorney Joseph Brajevich told the commission, “The payment is legal.” He offered no further explanation and was not asked to do so by any commissioners.
Consumer Watchdog and other critics argue the annual transfer is a violation of Proposition 26, a 2010 state ballot measure that says charges for government services must be linked to the cost of providing the service.
“This could be a Tuesday morning massacre for ratepayers with nearly one quarter of a billion dollars wrongly taken to fill the City of Los Angeles’s budget gap,” Consumer Watchdog President Jamie Court said before the vote. “This money amounts to theft from ratepayers. These dollars should go to fixing the DWP failing infrastructure or be rebated to ratepayers.”
An LADWP spokeswoman declined to comment on the transfer and the accusation from Consumer Watchdog that it violates Prop. 26.
The city’s proposed settlement of the lawsuits would reduce the annual payment by capping the 8 percent taken from the LADWP fund from rates determined by an ordinance approved in 2008, which is a lower rate than a measure approved in 2016.
A Consumer Watchdog representative said the law should still bar future takings from ratepayers without a vote of the public and that it is considering its legal options.