Consumer Watchdog announced Thursday that it has filed a lawsuit on behalf of a private taxpayer against the city of Los Angeles over an annual transfer of hundreds of millions of dollars from the Department of Water and Power’s budget to the city’s general fund.
The city has a longstanding policy of transferring 8 percent of the LADWP’s revenue to the general fund to help balance the city’s budget.
The payment has routinely been about $250 million or more for years, but critics have argued it amounts to an illegal tax.
The nonprofit is acting as co-counsel in the lawsuit that was filed by Jack Humphreville, who is president of the Los Angeles Neighborhood Council Coalition’s DWP Advocacy Committee and a frequent critic of the utility.
“It’s time to end this illegal tax so that the money can be used for the benefit of the ratepayer, whether it’s for improving our infrastructure, or whether it’s paying down the monstrous levels of debt in the power system,” Humphreville said.
Humphreville and Consumer Watchdog argue that the annual transfer is a violation of Proposition 26, a 2010 state ballot measure that says charges for government services must be linked to the cost of providing the service. By collecting the money from ratepayers through their bills but not using it directly on LADWP projects, the transfer violates Prop 26, the lawsuit says.
The 2017 LADWP transfer of $241.8 million was approved by the City Council in December, and city officials have had little to say about the transfer publicly.
The transfer was unanimously approved by the LADWP’s governing board in November 2017 with little discussion. After Humphreville raised questions about the legality of the transfer during the public comment period, Assistant City Attorney Joseph Brajevich told the commission, “The payment is legal.” He offered no further explanation and was not asked to do so by any commissioners.
The transfer item sailed through the Los Angeles City Council in December 2017 without any comments from council members during a meeting of the Energy, Climate Change and Environmental Justice Committee or during the full council meeting.
A spokesman for Los Angeles City Attorney Mike Feuer did not immediately respond to a request to comment on the lawsuit.