PASADENA : Proposition 3 Would Curtail City’s Access to Utility Funds

When Pasadena gets in a financial bind, as it has in recent years when the governor and Legislature cut local tax revenue, officials turn to the city’s profitable utility for a quick infusion of cash.

But all that could change after the election Tuesday if voters approve Proposition 3, which would halve the amount of money from Pasadena Water & Power that could be spent on general municipal services such as police and fire protection.

Several council members, the city’s Utility Advisory Commission, the Pasadena Chamber of Commerce and neighborhood groups are calling for passage of the measure as a way to keep utility rates low and force City Hall to live within its means.

“It’s just like having an open cookie jar,” said Timothy A. Price, president of the Daisy Villa Neighborhood Assn. “Any pet project that comes up they can go into the utility fund.”

But opponents of the measure, including Councilman Chris Holden, City Manager Philip A. Hawkey and the city’s police and fire unions, say the council has been careful about not siphoning away too much money from the utility, and that the city needs to keep its options open.

“If there’s a catastrophe or some sort of fiscal crisis . . . we can’t look to the utility” if Proposition 3 passes, Holden said.

This year, the city will take $9.3 million from its utility, accounting for nearly 9% of Pasadena’s general fund.

The debate over how much money the city should take from its utility to pay for general services has lingered for decades. In the 1940s, an era of shrinking revenues because of World War II, city voters approved an amendment to the City Charter that allowed as much as 16% of gross revenues from the utility to be spent on city services, officials said.

The take from the utility peaked after the passage of the tax-slashing Proposition 13 in 1978, when 15.58% of the utility’s revenue went into the city’s general fund, a city official said.

But there was a belt-tightening of sorts in 1990. The City Council passed an ordinance limiting the take to 8%--allowing the council to override the cap after a public hearing on the matter.

The ultimate ceiling of 16% was, and still is, in the City Charter. Proposition 3 would change the cap in the charter to 8%.

In the 1992-93 fiscal year, 10.54% of the utility’s revenue went to the general fund. The next year, the city took 9.55%. And this year it is projected to take 9.12%, officials said.

The city’s take the past few years has not been responsible for rate increases, both sides agree. And the city utility’s electric rates are lower than those of Southern California Edison.

But supporters of Proposition 3 complain that the city is spending utility revenue that will be needed in future years for improvements of equipment and facilities.