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Glendale stands by its transfer of electric utility revenues

November 21, 2012|By Brittany Levine, brittany.levine@latimes.com

City officials say they are on solid legal ground in continuing to transfer tens of millions of dollars in operating revenue from Glendale Water & Power -- no matter how residents vote in April on proposed amendments to the charter’s language governing the practice.

Pointing to newly found documents from more than 70 years ago, officials last week said that the city currently handles the electricity revenue transfers as intended: take a percentage directly from the utility’s operating revenues and transfer it to the General Fund, which pays for parks, police and other general public services.

Critics have likened the transfers to a backdoor tax, arguing they artificially keep customer rates high.

But city records show that was the point: The transfer was to reduce the need for other taxes, City Atty. Mike Garcia said.

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“It was to provide some stable base, stable source of income to the city from the utility,” he said, adding that any hesitation he had earlier has been wiped away.

Harry Zavos, a retired law professor and perhaps the loudest critic of the transfers, said describing the proposed changes as a clean-up of the current language is misleading.

“It does not remove an ambiguity,” he said at the meeting last week at City Hall. “Rather, it dramatically alters it to remove a prohibition.”

The problem is the way the transfer is described in the city’s charter. It includes multiple funds and, to a layman, some of the directions can seem contradictory.

The City Council held off on voting on whether to place the initiative on the ballot until a meeting on Nov. 27. Meanwhile, Zavos declared in an email to council members that he’d like to write the opposing argument.

Zavos successfully stopped the city’s practice of transferring millions of dollars from the utility’s water revenues to the General Fund last year after showing how the move could defy a state rule. The city attorney’s office then recommended stopping the water revenue transfer as a precautionary measure even though other cities continue to do it.

Glendale, however, has continued to transfer electricity funds from the utility, although officials plan to decrease the amount over time to help shore up Glendale Water & Power’s weak finances. Water rates were raised in March and electricity rate increases are set to come before the council after the election.

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