City officials on Tuesday said they want to tweak language in Glendale's Charter to reflect modern financial accounting practices and streamline the annual transfer of millions of dollars each year in utility revenues to pay for public services.
Any change to the city's Charter would have to be placed on an election ballot and be approved by a simple majority of voters, but city officials say the Charter's current decades-old language is a hindrance, given the current way of doing things.
The City Council plans to discuss the details of putting the item on an upcoming ballot at a future meeting.
The request comes amid controversy over the annual transfer from Glendale Water & Power's electricity revenues — $21 million this year — with critics complaining that the practice leads to artificially high utility rates.
Officials say city rules allow them to transfer the money. Residents want more parks, school resource officers and other amenities, but without the transfers, those benefits would be hit hard, officials said.
“If we were to just suddenly stop that $20 million [transfer], I think we'd have these chambers absolutely packed with irate citizens,” Councilwoman Laura Friedman said Tuesday.
The city closed a $15.4-million budget gap this year mostly by trimming city staff.
Last year, officials closed an $18-million shortfall by slashing programs and other spending.
The Charter allows for the City Council to transfer 25% of the utility's operating revenues, but resident Harry Zavos, a former law professor, has argued that the transfer is supposed to come from the utility's surplus funds if any exist at the end of the year.
“We understand what the objections have been,” said City Manager Scott Ochoa. “We just don't agree with them.”
Currently, the transfer rules include ways to track money that aren't in line with modern accounting principles. For example, the Charter includes a fund for money set aside to pay off bonds, an unnecessary step due to modern accounting techniques.
“Absolutely it needs to be cleaned up,” said Finance Director Bob Elliott.
But Zavos said accounting principles don't trump the law.
“The Charter is a fundamental law of the city. Accounting principles have to adapt to the law of the city, not vice versa,” Zavos said, adding that if the city wanted to raise revenues to support parks and police, it could put new taxes on the ballot.
However, if the majority of voters wanted to modernize the transfer's accounting rules, first approved by the public in the 1940s, then Zavos said he would support the change.
Glendale Water & Power has been struggling lately. Grappling with a $21-million deficit, the water side increased rates in March. Officials have said they need to raise $20 million for the electricity side this year to cover deferred capital improvements.
The city halted transferring money from the water side last year because of possible legal limitations on the way increases to water rates can be used.
Proposed electricity rate increases were also put on hold Tuesday after City Council members couldn't reach a consensus.
Friedman and Mayor Frank Quintero said they did not want to further discuss raising rates, but Councilman Dave Weaver described the move as “kicking the can down the road.”