DWP Ratepayers Facing Billions of $$$ in ‘Taxes’ Over the Next Five Years

LA WATCHDOG-Over the next five years, the Ratepayers of our Department of Water and Power will be hit up for over $3.7 billion in taxes by City Hall as a result of the combined 20% levy on the power portion of our DWP bimonthly bill.  And this does not include the billion dollar-plus price tag associated with the IBEW Labor Premium and its overly restrictive work rules that were approved by the City Council, City Hall’s pet projects, and the dumping of City employees and their unfunded pension liabilities onto the Department. 

But do we get anything in return? 

Unfortunately, not much as Mayor Garcetti and the Herb Wesson-controlled City Council continue toss our money down a rat hole rather than develop and adhere to a Five Year Financial Plan, invest in management information systems to help manage the City’s $8.6 billion budget, or create an operational and management plan to repair our streets, sidewalks, and the rest of our failing infrastructure. 

This tax revenue is expected to increase by $175 million a year to $815 million by 2020, a 27% increase from the current level of $640 million.  

One idea is to devote this incremental tax revenue that will exceed $500 million over the next five years to the repair and maintenance of our lunar cratered streets rather than asking the City’s skeptical voters to approve an increase in our sales or real estate taxes. 

Another alternative is to use this incremental tax revenue to upgrade the Power System’s infrastructure and reliability programs, alleviating some of the financial pressure on the Ratepayers, many of whom who are still feeling the effects of the City’s poorly performing economy.     

As part of the DWP’s dog and pony show highlighting the need to raise our rates by 25% to 30% over the next five years, we need to have a frank discussion about the two components of this combined 20% tax.  There is the City Utility Tax (10% for residential customers and 12.5% for commercial customers) and the not so transparent 8% Transfer Fee.  We also need a better understanding of, as the Los Angeles Times editorialized on Friday, “why Ratepayers should continue to subsidize City Hall.” 

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The City, the DWP Board of Commissioners, and the Ratepayers Advocate also need to address the legality of the 8% Transfer Fee that is the subject of three class action lawsuits. These complaints claim that this “fee” is really a “tax” pursuant to Proposition 26.  As it is, the Appeals Court has ruled that the payment by the Redding public utility to the City of Redding is illegal because it was not approved by the voters. 

If the 8% Transfer Fee is deemed to be illegal (a high probability), it will have a significant impact on the City’s budget.  Not only will it eliminate a revenue source that will average $300 million a year over the next five years, the City most likely will be required to repay over $1 billion that it has collected since the passage of Proposition 26 in November of 2010. 

There are many other issues that need to be addressed before the $1.2 billion rate increase is analyzed by the Ratepayers Advocate and approved by the politically appointed DWP Board of Commissioners and the City Council.  Anything less than complete transparency by DWP and City Hall is unacceptable to not only the Ratepayers, but to all the voters. 

 

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  [email protected]) 
-cw

 

 

 

CityWatch

Vol 13 Issue 63

Pub: Aug 4, 2015