Water Rate increase pending
This week (Oct 2), DWP approved another round of water-rate increases: 3.1 percent next July to raise about $23 million and another 3.1 percent hike in July 2009 to add $24.6 million to utility coffers. Power-rate increases also were approved and await action by the City Council and Mayor Antonio Villaraigosa. Money from the water hikes is expected to generate about $100 million to cover the cost of replacing aging pipelines, repairing environmental damage in the Owens Valley - the source of most of the city's water - and covering open reservoirs to meet water-quality requirements.
LA City wants $$ from DWP to fund a broader range of city services, but anti-tax groups disagree
On the heels of this news, the Daily News reported that back in April, the city wants to transfer funds from the water revenue fund to the city's reserve fund -- where it can be used for a broader range of services.
The City Council adopted an ordinance to move the $29.9 million from the water-revenue fund to the city's reserve fund Feb. 21. It was approved by Villaraigosa on March 5. On April 9, the city filed a "complaint for validation", which was intended to be a "pre-emptive strike" in case someone challenges the city's attempt to transfer the funds. If the court rules in the city's favor, DWP will proceed with the revenue transfers
However, conservative anti-tax groups (Howard Jarvis Taxpayers Assn) want to challenge the city and filed a response to the city's complaint. They say that the transfer of excess funds mean that the DWP is over charging people to put money into the city's coffers -- and this means that this is a tax.
DWP commissioner David Nahai supports the transfer. He says that the water fund is the equivalent of a franchise fee that other cities commonly charge utilities. "The transfer has historically been made from the DWP to the city. It's a decades-old practice. Others pay a franchise fee to the city. ... It's a very common practice," he said. He also says that if the fund transfer is denied, there won't be a rate decrease.
In June, the DWP board adopted a $4 billion budget that includes a five-year, $1 billion upgrade program for the utility, along with the rate increases.
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