DWP Grudgingly Cuts Public Affairs Budget

Under pressure from the Los Angeles City Council, Department of Water and Power commissioners reluctantly agreed Thursday to slash by a third a $9-million public affairs budget that includes a $155,000-a-year director, 44 employees and millions of dollars in consulting contracts.

During a tense one-hour special meeting, DWP board members said the cuts would still not reduce the need for a proposed 11% water rate increase that would raise about $23 million to help reduce a projected $98-million deficit. The rate request is pending before the City Council, where a majority of members have spoken in opposition to the hike.

DWP officials said they made the cuts in the public affairs budget only to appease council members.

“Nobody said this is reasonable, rational,” said an angry Mike Gage, president of the DWP board of commissioners, noting that the agency already has trimmed $45 million from its $560-million budget. “The issue before us is more political, more symbolic. . . . It’s to show that we’ve developed the proper suffering quotient.”

City Council members have demanded that the city-owned utility further cut its budget before asking customers to pay higher rates. And at a council hearing on Wednesday, members berated DWP officials for spending millions of dollars on such things as public relations and office furniture.

But Gage said those complaints were not grounded in the grim realities of the agency’s operations.

“I can’t understand why anyone (on the council) would refuse us the reasonable allowance we are asking for,” said Gage. “It’s untenable, it’s unpalatable and it’s downright shortsighted. . . . The council is demanding a pound of flesh.”

The board also tried to address council members’ concerns that higher water rates would penalize their constituents for conserving water during the drought. The DWP commissioners agreed to implement a $6-million program to rebate $1 per month to all customers who meet their water conservation goals.

Gage said the public affairs department--which has 44 employees and dozens of consultants--has served as a lightning rod for council criticism.

In the past five years, public affairs spending at the agency soared more than 300%, from $2.8 million in 1985-86 to $12.1 million in 1990-91, records show. The staff of the division grew from 30 employees to 44.

This year’s budget was down to $10.8 million, and officials said it already was being trimmed to about $9 million before Thursday’s action.

DWP General Manager Dan Waters said he hopes to avoid layoffs in the public affairs department by transferring employees and slashing expenses for advertising, educational programs and outside consultants.

DWP officials said the steep growth in public affairs spending was a response to criticism directed at the agency in the mid-1980s by council members and others who claimed the agency did a poor job of communicating with the public.

Much of the increased effort, including more advertising and staff to deal with the news media, produce educational publications and develop contacts with community groups, was directed at water conservation, officials said.

Spending on outside professional services, including consultants, writers, printers, video production firms and graphic designers, swelled from about $60,000 in 1985-86 to $2.9 million in 1990-91, records show.

Advertising costs last year, during the height of the water conservation drive, hit a record $3.1 million, tripling from a few years earlier.

“It was all of these communication tools in the end that did the job” of getting the public to conserve water, said Lloyd Dennis, DWP public affairs executive director.

Dennis defended the size of his staff and said the City Council criticism and Thursday’s commission action were ironic. His division’s increased spending helped the city exceed its water-saving goal, contributing to the financial controversy in which he has become a target.

Indeed, much of the council criticism has focused on the $155,000 a year paid to Dennis, a private consultant and former senior vice president of First Interstate Bank. A contract employee, Dennis was recruited in 1986 to overhaul the public affairs division.

An outside professional was hired because there was no qualified candidate within the Civil Service system, said General Manager Waters.

Since 1986, Dennis’ pay package has grown 82%. Much of the increase, Waters said, has been for health care and other benefits. Dennis’ actual salary is about $95,000 annually, Waters said, and is in the low range for the department’s division heads.

Council members also criticized spending on public affairs consultants. DWP officials said the services were needed but will be re-examined in light of the cutbacks.

At least two of the consultants, paid tens of thousands of dollars in recent years, were brought aboard by Dennis without competitive proposals. One, G. Dean Avery, worked with Dennis at First Interstate and was hired to develop a community outreach program and advise top executives. Records show he has been paid more than $300,000 since 1986.

Another, Don Anderson of Summit Communications, was chosen by Dennis to write speeches, reports and major internal planning papers after Dennis heard good reports about his work. Records show he has been paid $61,000 since 1989.

Eric Tharp, who oversees administrative matters in the public affairs division, said it is unusual to hire consultants without contacting other vendors and he knew of no other contracts awarded in that manner.

Dennis defended the contracts, saying “I had to go to people I could rely on to produce the products needed.” Waters said he approved of the contracts and praised the consultants’ performance.