Truisms on the transfer of utility funds

In the ongoing back-and-forth over the legality — or even prudence — of transferring revenues from Glendale’s municipal utility to the city’s own coffers to help pay for public services, it may help to distill the spat into a set of simple truisms.

First, Glendale has been consistently hampered in its ability to raise property taxes or assessments by state voters, who have passed proposition after proposition that neuter the taxing powers of municipal governments.

That has left Glendale with few options for generating the kind of revenues needed to support and serve its population, which has grown dramatically in the decades since some of these state-level constraints were put in place. That, in turn, has made Glendale Water & Power an ever more important source of income, especially as the city’s other income streams — namely sales tax revenues — were ravaged by the Great Recession and the dissolution of local redevelopment agencies.

Critics will contend that using the utility transfers — $21 million from the electricity side this fiscal year alone — is an end-around, a de facto tax hike on consumers because city officials backfill those transfers with rate increases, a move that doesn’t require the vote of residents, just the City Council.

Officials, including the City Council, have consistently held that the transfers — at least from the electrical utility — are not only perfectly legal, but expected since Glendale Water & Power is a municipal entity that was set up to support the city as a whole.

But whichever side of the coin the public comes down on in this argument, another factor should be considered.

The General Fund budget — which pays for libraries, parks, public safety and other services — had a yawning $15.4-million budget gap this fiscal year. And even with the $21-million transfer, City Hall is shedding more than 100 positions through a mix of early retirements and lay-offs.

Are residents really prepared for what things would look like without the transfer?

The vast majority of cities that own their utilities make similar transfers, albeit at different levels. But if city officials intend to continue to ask residents to accept utility rate increases, they at least owe it to them to be upfront about how they’re moving the money, what exactly it’s paying for, why it’s needed — and what happens if it doesn’t come in.

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