Long Beach city staff has recommended placing a charter amendment on the municipal ballots on June 5, however the measure to make that change to the municipal law has so far escaped significant public scrutiny. Advocates said that, if Long Beach voters ultimately pass the measure, the change could fix a problem that left the City exposed to legal headaches. One of those headaches has been estimated to cost $8.3 million.
Long Beach City Manager Pat West and Financial Management Director John Gross explained the issue to councilmembers in a special meeting on Jan. 10 in which the charter was discussed. Long Beach residents in two separate lawsuits challenged the City’s practice of transferring payments from the funds covering gas, water and sewage to the municipal general fund.
“The revenue transfers are authorized by the city charter,” West told the council, “but the lawsuits are based on changes made to the State constitution by Proposition 218 and Proposition 26 that occurred well after the transfers were begun.”
In the meeting last week, Gross explained that the lawsuit surrounding the gas utility had been dismissed in a trial court, however it is being appealed. The City chose to settle the other lawsuit concerning the water and sewage fees, and that choice did take a big chunk of money from Long Beach’s general fund. The financial management director emphasized that the impact of that settlement on the general fund has been estimated to total $8.3 million. While Gross explained that the City is expected to prevail in the gas lawsuit, if Long Beach doesn’t win that other suit, the impact to the budget would be much greater than the $8.3-million settlement for water and sewage fees.
West explained to the council the urgency of passing the measure that would change the City’s charter.
“A charter amendment can mitigate the impact of the lawsuits and prevent service reductions to the community and its residents as a result of the lawsuits,” he said last week. “This can be accompanied without any change to the costs that residents were previously paying.”
Property owners, however, might get used to the new rates for water and sewage. Gross noted that, in compliance with the settlement, starting Jan. 1, the bills for water and sewage were reduced by an average of $3 a month per customer. Gross, who also recommended the amendment, described how Long Beach had been authorized to make these utility-revenue transfers to support municipal services for decades. He added that the gas-utility transfers have been made since 1940 and that water-utility transfers have been made since 1956.
“The amendment,” Gross said, “if passed by a majority vote, would negate the adverse impacts of the lawsuits and would explicitly authorize continuation of the 60-year-old practice of utility-revenue transfers.”
The financial-management director further explained to the council that Long Beach voters would ultimately decide the fate of the charter amendment. Gross described how, if voters choose to pass the measure in June, the city services would not be negatively affected by the lawsuits.
“Utility-revenue transfers could continue to be used for general services such as 9-1-1 dispatch, police, fire, street maintenance, parks and libraries,” he concluded.
Last week’s public hearing on the city charter didn’t draw a lot of public attention, but it did attract the ire of Long Beach resident Tom Stout. He blasted city leaders, claiming that the City has been “stealing” for a long period of time. He seemed to defend the merit of the lawsuits launched against the City.
“Do you guys have any shame?” Stout asked in the public-comment period. “Any money that comes from that fund that’s in excess of what they need to run it should either lower rates, it should be rebated, or it should be fixing the infrastructure— not going into the general fund, the black hole, where nothing ever comes out.”
Stout has been a vocal critic of the city council’s past efforts to put tax measures on the ballots. In 2016, he had vehemently opposed Measure A, which effectively increased Long Beach’s sales tax by 1 percent. Long Beach voters did pass that measure.
Stout was only one of two residents who spoke out at last week’s council meeting.
Diana Lejins, the original plaintiff behind the lawsuit concerning the utility fees covering water and sewage pipelines, did not mince words about the merits of her suit.
In a phone interview, the Signal Tribune asked Lejins why she sued the City in the first place.
“First of all, what they were doing was illegal. Period,” she said of the utility transfers. “Collecting money illegally is not okay. I mean, it would be like reporting any crime.”
Lejins, a Long Beach resident and medical-marijuana patient advocate, noted that the city leaders were not using common sense when it came to its budget. She pressed for the city leaders to curtail spending, and she even noted that the City could have at least allowed medical-marijuana dispensaries to sell recreational marijuana to help make up for the drain on the City’s general fund.
The City is poised to collect a significant amount of taxes and fees from legal marijuana businesses. However, only four medical-cannabis dispensaries have opened, and 28 applications for licenses for these businesses are in the pipeline, according to Assistant City Manager Ajay Kolluri, who handles marijuana issues for Long Beach. Recreational-marijuana shops are still prohibited in Long Beach.
“You know, don’t burden the average, everyday taxpayer more than you need to,” Lejins concluded.
[Ed. note: Lejins has also been a contributing photographer to the Signal Tribune.]
The next public hearing will take place on Feb. 13, and Gross confirmed in last week’s meeting that the council is expected to only receive and file the staff report on the charter. Gross added that the March 6 meeting will be the only opportunity for the city council to request the measure to be placed on the June ballot.
