LA WATCHDOG - Over the past year, the Department of Water and Power has considered asking the City Council to place three measures on the November 8thballot.
While it is unlikely these measures will be presented to the voters because of the need to have documentation by the end of the month, they provide interesting insights into the department.
One measure addresses the Transfer Tax from the Power System to the City’s General Fund. While this tax that was never approved by the voters, it was designed to yield an amount equal to 8% of the Power Systems revenues. However, this year’s transfer tax of $225 million is only 5.3% of revenues as the result of the settlement of a class action lawsuit. While there is no documentation, this proposal would simplify the calculation of the Transfer Tax, possibly resulting in a fixed amount, adjusted annually for inflation.
One concern is that the City may be tempted to increase its haul. As it is, Ratepayers pay over $650 million to City when the 10% Utility Tax is included, doing more than their fair share.
If approved by the voters, this measure would validate the Transfer Tax and eliminate future litigation of its legality.
As second measure would increase the Low Income/Lifeline subsidies that are now around 1% of revenues. They cannot be increased because of the limitations imposed by Propositions 218 and 26. While an increase in these subsidies may be appropriate, we need to make sure that the politically motived politicians do not give away the store.
The third measure involves the allocation of Wholesale Profits. Under this proposal, these revenues and profits would be used for capital projects instead of placing them in the power revenue fund which results in lower rates.
According to DWP insiders, the proposals regarding the Transfer Tax and Low Income/Lifeline subsidies did not pass muster with the City Council. However, the allocation of Wholesale Profits may have some life, but if approved, it would be an inappropriate rush to the ballot.
Over the next decade, the Department anticipates spending more than $100 billion on the LA100 Renewables plan, the Power System Reliability Program, and the upgrading of its local distribution system to 34.5 kV. This will result in increased DWP bills that dramatically exceed inflation that created the need for the three ballot measures.
Before considering any ballot measures, DWP needs to give Ratepayers a clearer picture of the impact of this massive expenditure program on the bills of the long suffering Ratepayers. The Department and its politically appointed Board of Commissioners need to earn our trust and confidence, especially after the recent scandals where the former General Manager was sentenced to six years in prison. And importantly, a rush to the ballot and the lack of transparency is a recipe for NO votes on these ballot measures.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)