After reducing the transfer for this fiscal year by $250,000, officials said they plan to continue that trend over time. But that came after a $2-million increase in 2011 following the end of the roughly $4-million water transfer.
While water assessments hinge on the state proposition, the electricity debate centers on the city charter.
The charter requires the utility's money to be split into several accounts, including a surplus fund. The charter allows the city to transfer 25% of the fund as long as the council doesn't think doing so harms the financial position of the utility.
For weeks, Glendale resident and retired law professor Harry Zavos, who led the charge against the water transfer, has been trying to convince officials that doing so on the utility's electrical side bucks the charter's intent.
But City Atty. Mike Garcia said last week that the electricity transfer is legal, and Finance Director Bob Elliott said the funds listed in the charter are not in line with modern accounting principles.
Officials maintain the transfers aren't injurious, even as the water side faced a $21-million deficit in March and Fitch reported unrestricted cash for the electric fund declined 27% to $42.3 million over about four years ending in June 2012.
“The intention of the framers of our charter [was] that we would indeed transfer money for the general benefit of the overall community,” Ochoa said at a council meeting this week. “I fail to see that there is some nefarious reason behind that.”
Fitch gave the utility's electricity side an A+ rating with a stable outlook last month, but the proposed rate increase was in part what stopped the bond rater from downgrading the utility.
“They need a revenue increase to support costs, including the transfer,” said Kathy Masterson, a senior director at Fitch.
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