During its September 3 meeting, the Long Beach City Council approved a controversial water rate increase of 12%, effective October 1, 2019. Before going to the city council for final approval, the rate increase went through a public hearing process required by state law, which drew over a dozen public speakers in opposition to the increase. According to Deputy City Attorney Richard Anthony, a total of 1,443 residents contacted the city to protest the proposed rate increase.
The Long Beach Water Department, represented by General Manager Chris Garner, has argued that rate increases are necessary to maintain and repair an aging network of pipes, revive local wells to avoid costly water imports and upgrade water storage tanks. Opponents of the rate increase have argued that no increase would be necessary if the department stopped transferring funds in excess of $12 million to the city’s General Fund each year, a practice some opponents consider akin to a tax that hasn’t been properly approved by voters.
“I am here tonight less in opposition to the actual dollar amount of the rate increase as it affects individual bills, although it will hit those on fixed income very hard,” Regina Taylor told the board of water commissioners during the required public hearing on August 29. “I am here to object to it being used as a manipulation, to funnel surplus monies into the General Fund, which is like dumping money into a pot that has a hole in the bottom.”
In November 2017, the City of Long Beach settled a lawsuit filed on behalf of Long Beach resident Diana Lejins, agreeing to return $12 million from the city’s General Fund to the Water Fund. The lawsuit alleged that the city had improperly charged the water department for using city pipes to create an additional revenue stream for its General Fund, to be allocated at the council’s discretion. The complaint alleged that over $90 million had been misappropriated over the past decade. The city agreed to return $4 million per year, for the following four years.
As a result of the lawsuit and the subsequent return of funds to the water department, water rates dropped in January 2018. Just a few months later, on June 5, 2018, Long Beach voters approved Measure M, a city charter amendment with the purpose “to explicitly authorize and affirm the transfer of surplus city utility revenues to the city’s General Fund.” Following the approval of Measure M, water rates were restored to pre-settlement levels, effective October 1, 2018.
In FY 19, the water department transferred $12.3 million to the city’s General Fund, according to this year’s budget presentation. The FY 2020 budget, which was also approved by the city council on September 3, allocates $12.7 million for transfers to the General Fund.
Lejins attended the public hearing on August 29 to speak out against the proposed water rate increase. “Proposition 218 says you cannot charge more for a service than the actual service [costs],” she told commissioners. The proposition, which was incorporated into the state constitution in 1996, mandates that all taxes and most charges to property owners be subject to voter approval.
Regardless of Long Beach voters’ approval of General Fund transfers through Measure M, she argued, the increase of rates to fund these transfers violated the constitution. “It doesn’t matter how many people vote for it; you still can’t do that. It’s a constitutional issue,” Lejins told commissioners. “Technically, you’re breaking the law. You’re co-conspirators in the mayor and the council breaking the law.”
On October 22, 2018, Lejins filed another lawsuit against the city, in response to the 2018 restoration of water rates to pre-settlement levels. Long Beach Water Commissioner Gloria Cordero noted that the department would not comment on the ongoing litigation during the August 29 hearing.
During the same hearing, Garner argued that the 2018 increase, which is the subject of Lejins’ most recent litigation, did not provide additional funds for the water department to use for its own needs such as well restoration, storage tank repairs or pipe maintenance. Instead, he noted, the additional revenues were used to offset transfers to the General Fund as authorized by voters through Measure M. “We have not had an increase since October 2017 for our own water purposes,” he told attendees of the public hearing.
The water rate increase was approved by the city council in a 7-1 vote, with 8th District Councilmember Al Austin casting the sole dissenting vote. The item has been scheduled for a final vote in front of the city council on September 10, with new rates scheduled to go into effect on October 1, 2019.