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Why an electricity rate increase is illegal

July 20, 2012

For the city's prospective electric rate increase to be legal, California's Constitution Art. XIIIC, as amended by Proposition 26, requires the peoples' vote, for it mandates, “No local government may impose, extend or increase any special tax unless … that tax is submitted to the electorate and approved by a two-thirds vote.” A special tax is one “imposed for a specific purpose.” The electric rate is for a specific purpose. It’s a tax.

Under Art. XIIIC, “tax” is “…any levee, charge or extraction of any kind imposed by local government....” unless it meets one of seven exceptions. Only the second could apply, and then only if it meets the following three requirements: It must be “…[1] imposed for a specific governmental service or product provided to the payor [2] that is not provided to those not charged and [3] which does not exceed the reasonable cost … of providing the service or product.”

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The second requirement cannot be met because GWP, free of charge, provides the electricity for city street and traffic lights that serve the general public. The third cannot be met since the city annually transfers $21 million of electric fees to the general fund where they aren't used for electricity — a sum that could eliminate the need for the increase.

Proposition 26 ends the tactic of disguising tax increases as fees to circumventing Proposition 13's requirement for voter approval. But a rate increase, without voter approval, while GWP resources (free electricity and $21million) are used to subsidize the general fund, is just that—a surreptitious tax evading the people's vote.

Harry Zavos
Glendale

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