city hall money

City Council members were scheduled Wednesday evening to discuss for the first time a charter amendment that would allow direct money transfers from the Water Department and the Gas and Oil Department to the city's General Fund.

There still will be two more meetings before the council can vote on putting a charter amendment on a ballot for a citywide election. To put an item on the June state primary ballot, a decision must be made by March.

Council members, who also make up the Charter Amendment Committee, are reviewing a suggested money transfer to make up the gap created when the city settled a lawsuit over pipeline fees the city has been collecting since 2003.

That lawsuit, filed by Diana Lejins and supported by former City Councilwoman Gerrie Schipske, argued that the pipeline fee violated a state law called Proposition 218 because it wasn't directly connected to the cost of providing water and sewer service. The settlement reduced the total pipeline fee by $8.3 million a year, plus the city has to repay $12 million over the next three years.

Water and sewer rates have been reduced to reflect the settlement, meaning the average household is paying about $3 a month less. But the projected deficit in the Fiscal 2019 general fund budget has been increased by the $8.3 million.

A similar lawsuit (brought by other people) against the Gas and Oil pipeline fee is currently in the appeal process, but expectations are the results will be similar to the water lawsuit.

In response, city staff has suggested a direct transfer from the utilities based on gross revenue — much like what the Port of Long Beach does now. Preliminary charter amendment language language would cap the allowable transfer at 12% of each utility's gross revenues, which would be slightly more than what the full pipeline fee had been collecting.

Details of that transfer and oversight language were scheduled to be discussed Wednesday in what is formally being called a joint meeting of the City Council and the Charter Amendment Committee, even though the entire council is the membership of the charter committee. In order to put a proposed amendment on the ballot, the council must meet three times within 60 days.

Wednesday, the staff was scheduled to make its presentation on details and take direction from the council for any additional information or potential language changes. there also was a public comment period.

On Tuesday, Feb. 13, a second meeting will receive any updated information, hear from the public again and consider specific language again. Then, on Tuesday, March 6, the council will meet for a third time to make any final changes, hear from the public one more time and vote on whether to go to the ballot with the amendment.

A direct transfer from the Water Department would be legal if approved by city voters, and would not be subject to Proposition 218 limitations. According to the staff report for Wednesday's meeting, the contemplated transfer would only raise utility rates back to the level they were before the lawsuits.

Harry Saltzgaver can be reached at hsalt@gazettes.com.

NOTE: This story has been updated to reflect that it was city staff, not Mayor Robert Garcia, recommending consideration of the utility money transfer.

Harry has been executive editor of Gazette Newspapers for more than 20 years. He has been in the newspaper business for more than 30 years, with experience on both weekly and metropolitan daily papers in Colorado and California.

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