What will ruling in LADWP case mean for Pasadena?
A ruling in the lawsuit filed by the Howard Jarvis Tax Payer's Association appears to confirm that the transfer of funds from a city's utility to a city's general fund is a violation of state law. From the Los Angeles Times:
A Superior Court judge has issued a tentative ruling ordering the Los Angeles Department of Water and Power to repay its customers nearly $30 million that city officials had hoped to spend on other services.
The tentative ruling, which was issued last week, said the DWP's long-standing practice of moving money from its water fund into the city's general fund -- which pays for such services as police, fire protection, street maintenance and libraries -- violates provisions of the anti-tax measure Proposition 218.
The ruling calls on the city to recalculate its water rates for the 2006-07 fiscal year -- when the money was collected -- and give customers either refunds or credits on future bills.
Why is this relevant to Pasadena? The city generally transfers about 7.5 to 8 percent of the Pasadena Water and Power budget to the city's general fund each year. This year the transfer was about 7.5 percent, somewhere around $11 million, but the latest budget recommendation is to up its increase to the full 8 percent because of its troubled budget situation.
It would not be surprising to see L.A. appeal the decision, so I doubt Pasadena will be making changes any time soon. Ultimately, the city would not have to make any changes, though it could risk a similar lawsuit to the one filed by the Howard Jarvis association.
In the long run, if the city did have to make changes, it would certainly impact the city's spending habits: transferring the funds from the city's utility has been an essential part of balancing its budget (when it does balance its budget) each year.
I've emailed Michael Beck to see if this is on the city's radar at all.
UPDATE: Beck tells me (via email) that the decision will not affect Pasadena because PWP has a different charter. I'll be speaking with someone in the city on the topic to get more detail later this week.



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