Voters help two Southern California cities dodge budget gaps

Register now

LOS ANGELES — Two southern California cities approved ballot measures that allow a portion of utility revenues to be transferred to the cities' general funds to pay for city services.

Both Long Beach and Burbank had faced lawsuits alleging that the transfers violate Proposition 218, which states that property-related service fees can't exceed the cost of the service.

Measure M allows Long Beach city officials to transfer up to 12% of gross revenues from city-owned utilities to the city’s general fund. Burbank voters approved Measure T, a similar ballot measure that allows that city to continue a 30-year practice of transferring up to 7% of Burbank Combined Utility Enterprise’s annual gross electricity sales revenues to the city’s operations.

Both measures resulted in changes to the respective city charters.

Moody’s Investors Service analysts called passage of the Long Beach measure in the June 5 election a credit positive for its gas enterprise in the rating agency’s weekly credit outlook.

Passage allows Long Beach to “continue the historic practice of transferring utility fund revenue to the general fund to support core city services including police and fire protection, 911 response personnel and street, parks and library operations,” analysts wrote.

Burbank uses the revenue to fund such items as fire, police, street improvements, infrastructure, landscaping, libraries and streetlights, according to Moody’s.

Burbank would have lost roughly $11.3 million, or 7.5% of annual revenues, raising the possibility of tax increases or cuts to city services, analysts wrote.

Failure of the ballot measure would have created a $12.4 million deficit in Burbank's fiscal 2018-19 budget.

Utility transfers in Long Beach have averaged $20 million annually, constituting a moderate, but critical 4% of general fund revenues, analysts wrote.

For reprint and licensing requests for this article, click here.
Budgets California
MORE FROM BOND BUYER