Lawsuit over utility-fund transfer continues

As a trial on the legitimacy of Glendale’s utility-fund transfer continues to inch forward, critics of the practice continue to claim it is illegal, while city attorneys counter the transfer has always been proper.

Both sides are due back in court Dec. 2 to set a trial date, and Michael Colantuono, who is representing the city, said he believes a trial could start in mid-2015.

In February, the Glendale Coalition for Better Government filed a lawsuit against the city to force it to stop transferring tens of millions of dollars from its utility to the general fund and send back $90 million in utility money that’s been shifted since 2010.

While city officials have contended the fees pay for police, parks and other general services, critics call the move a backdoor tax and say it artificially inflates utility rates.

“The coalition is essentially seeking that the city use electrical revenue for electrical works and use water revenue for water works so that it no longer uses these revenues for other purposes,” said attorney Arthur Jarvis Cohen.

The local group believes the city can only make such transfers from a surplus under the city charter, based on the state constitution.

But according to court documents filed by Colantuono, the claims of illegal activity are canceled out because the transfer was approved decades before the constitutional provision, known as Proposition 26, was drafted.

The utility transfer was approved by local voters more than 60 years ago as a tool for maintaining city services.

Los Angeles Superior Court Judge James C. Chalfant combined the coalition lawsuit with a similar complaint made by the International Brotherhood of Electrical Workers Local 18.

Attorneys representing the city and the coalition said combining the like cases simplifies the litigation process for the judge, but they could be split up once again when they go to trial.