Clearly, the City Council was not pleased this week when confronted with the fact that Glendale’s water revenue transfers to the General Fund — a practice that stretches back a decade — might be against the law. That determination was made Tuesday by the city attorney, based primarily on a 2006 state court decision.
The council’s pique is not surprising. Since 2000, the city has transferred nearly $35 million from Glendale Water & Power water revenues to support the General Fund, which pays for firefighters, police and other services — a provision written into the city’s Charter more than 60 years ago.
Without that income, the city’s projected budget deficit of $10 million could deepen, although more money from electricity revenues — which aren’t covered by the court decision — could be theoretically tapped to make up some of the difference.
Our problem isn’t with the revenue transfers. Glendale was pigeonholed by Proposition 13 — the voter-approved law in 1978 that essentially locked the city into comparatively lower property tax rates than other cities, which meant greater reliance on the city’s utility to keep up with the cost of public services. If the city doesn’t “make money” off its utility, what’s the point? In our view, the 2006 court decision, and the laws that back it up, were shortsighted and wrong. But that’s not the point either.
At issue is that it took five years to officially recognize a legal reality. That the city is so reliant on the transfers makes it hard to believe this wasn’t a case of City Hall sticking its head in the sand and hoping everyone else would too. Perhaps the city was hoping the issue would be overturned on appeal, but the potential liability would make such a strategy dubious at best.
Now that it’s been pulled out, Glendale’s financial situation will have to be discussed more frankly than it has been in the past five years. And that will hopefully lead to some more sustainable, long-term budgeting decisions.