A Glendale resident and a city union filed a lawsuit last week in Los Angeles Superior Court asking a judge to stop Glendale officials from transferring tens of millions of dollars from its utility fund to pay for police, parks and other general services.
The action may seem like deja vu as a citizens group called the Glendale Coalition for Better Government asked a Los Angeles judge to do the same thing just a few weeks ago.
Both lawsuits claim the city is breaking its own charter rules, as well as state tax rules, by moving the money paid by rate payers to Glendale Water & Power to the city’s General Fund, but the new case has a twist.
The recent lawsuit filed in part by the International Brotherhood of Electrical Workers Local 18 contends that, on top of the tax issues laid out in the first lawsuit, Glendale should stop transferring the money because it has done so even as the utility's finances floundered, a violation of the city’s charter.
Glendale rules allow the City Council to transfer up to 25% of utility revenues, so long as Glendale Water & Power continues to have a strong fiscal position, according to the lawsuit filed March 13.
In June 2012, the council approved a transfer of about $21.2 million, reducing the allocation to 10.4% to “insure the sound financial position” of the utility. Four months later though, 20 utility workers were laid off because of a roughly $11 million shortfall in the electric fund.
“The shortfall in the GWP budget is less than half the amount the city transferred.... Had the city not transferred these funds these employees would not have been laid off,” the lawsuit states.
The transfer has been a hot-button issue in Glendale for years, with criticisms coming from residents and the Los Angeles County Civil Grand Jury alike. But city officials continue to defend the mechanism, noting that without it, quality-of-life services could not be supported.
“We disagree with the contentions,” said City Atty. Mike Garcia in a phone interview Monday. “We feel we have a very strong legal defense.”
Not only has the transfer been a prickly issue, but so has the International Brotherhood of Electrical Workers Local 18’s relationship with the city. The two sides have long fought over union contracts, both at the negotiating table and in court.
Lawyers for Glendale resident Juan Saavedra, who is not a former or current Glendale Water & Power employee, and the union, are also asking a judge to stop the city from calculating the 25% transfer using gross revenues rather than net revenues. A quarter of the gross revenues for 2011-12 would have been about $50.2 million, which is 40 times more than the same transfer would be from net revenues, which was about $5 million.
Garcia said interpreting the revenues on a net basis would be flat-out wrong because city rules say the transfer includes operating revenues.
“This lawsuit represents nothing more than a thinly-veiled attempt to impact the bargaining process without any regard to the overall health of the organization or the quality of services provided to the city’s residents and ratepayers,” Garcia said in a follow-up email, “To the contrary, the city will continue to keep the overall health of the city as its focal point in addressing issues of the type now being litigated.”