Ratepayers Cannot Afford DWP Taxes

LA WATCHDOG - The City is considering many ways to increase its revenues by placing measures on the ballot. These new sources of revenue, if approved by the voters, will pay for City’s budget busting labor contracts and its fiscal follies. The City’s unions are also working to place two initiatives on the ballot.  But what is not even discussed is the massive increase in taxes that will be borne by the DWP Ratepayers. 

The Mayor and the City Council are preparing to place three measures on the June Primary Ballot that will bring in close to $200 million a year.  These include increases in the Hotel Tax designed to raise around $50 to $100 million a year, the Parking Occupancy Tax ($70 million), and a Cannabis Parity Tax ($70 million) on unlicensed pot shops. 

There are additional measures being considered for the November ballot that would raise between $300 and $400 million.  These include a retail delivery fee, a shared ride tax on taxicabs and companies like Uber and Lyft, a major event tax on tickets where attendance is greater than 5,000, and a vacancy tax on unused commercial and/or residential properties.  

There are also union related efforts to place two half-cent increases in our sales tax to benefit the Los Angeles Fire Department and the Department of Recreation and Parks. If approved by the voters, these would increase our sales tax to a whopping 10¾% and add around $900 million to the City’s coffers.  The County Supervisors are also considering another half-cent increase to Restore Healthcare for Angelenos ($1.2 billion). 

What has not been discussed is the Utility Tax paid by DWP Ratepayers that will accompany the massive increase in power revenues associated with the LA 100 Renewables Plan. Under this plan, electricity rates are expected to quadruple by 2035, increasing power revenues at a rate of 15% a year, from $5.3 billion to $21 billion. At the same time, the Utility Tax will increase from $530 million to over $2.1 billion. 

Over the next ten years, Ratepayers will pay over $15 billion in taxes to the City. This is in addition to having our power rates increase by $16 billion a year. Ouch! 

Today, Ratepayers are funding 9% of the City’s $8.2 billion General Fund through the Utility Tax and the Power Transfer Fee ($225 million).  In 2035, the Ratepayers will be forking over $2.4 billion to the City providing 20% of projected General Fund revenues. 

The huge increase in power rates and related taxes create an unaffordable burden on all Ratepayers, including businesses that employ over two million Angelenos.  This is an issue that must be addressed in a transparent manner by the Mayor, the City Council, and the Ratepayer Advocate. 

(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)