Long Beach residents and business owners could soon get another one-time credit on their monthly water bills if the Long Beach Board of Water Commissioners votes Thursday to return upward of $21.8 million to customers later this year.
The vote is looming because, in March, the city lost an appeal to keep in place the Measure M charter amendment, which allowed the Water Department to transfer millions of dollars in excess money to the city’s general fund each year. Voters approved the practice in 2018, but a judge’s decision that it amounted to an unconstitutional tax means that the city must transfer back $30.8 million to the water fund by Sept. 20.
Since the ruling, officials have worked quickly to handle the fallout.
Long Beach already transferred back $9 million to the Water Department in March, which it was required to do within 30 days of the California Supreme Court denying its appeal in March.
Water commissioners, in turn, approved one-time rebates totaling $9 million for all of its residential and commercial customers, which resulted in $100 credits for all accounts.
Last week, the water board voted to reduce rates over the next few months by 2.54% in a move that the department said would cost it about $3 million over the next four months.
But Thursday’s vote could distribute the final $21.8 million in credits differently. The department could award them based on the type of account and meter being factored in to allow customers who used more water to get bigger refunds.
Lauren Gold, a spokesperson for the Water Department, said the credits could range from about $160 for the average residential account to between $2,500 and $10,000 for larger commercial accounts. Gold said that the volume used is much different with the average household paying about 90 cents per day and commercial accounts paying about $94 per day.
Thursday’s vote is one of the last steps the Water Department needs to take to comply with the judgment that ruled Measure M transfers were unconstitutional. Proposition 218, a statewide law approved by voters in 1996, prohibits municipalities from charging more for utilities than what it costs to provide the service.
Measure M applied to water, sewer and gas utilities in the city, but the court’s ruling stopped those transfers to the general fund from only the water and sewer funds. Bob Dowell, director of Long Beach Energy Resources, said the gas transfer would continue. Together, the three funds totaled $23 million in projected transfers for the current fiscal year that ends Sept. 30.
The water board will also recommend a new charter amendment Thursday that could combine the city’s water and gas utilities. The City Council would have to agree to place the issue on the November ballot for voters to decide.
Initially, Long Beach contemplated holding onto some or all of the $21.8 million illegally collected under Measure M in order to address capital infrastructure investments like new ground wells or maintenance on water tanks and ground pipes.
Officials reasoned that the court’s ruling did not include an explicit requirement to reimburse the funds or decrease the rates in line with the end of the transfers. However, the Water Department pivoted this month and said it would drop rates and consider sending the remainder of the $30.8 million to customers.
Whether rates will be reduced by more than 2.54% is still to be determined. Part of Thursday’s meeting includes a workshop where residents can give input on the department’s budget that will be submitted for City Council approval this year, which includes the rates charged for water and sewer access.
When the board approved its budget last year it estimated that every 1% increase in water rates equaled about $1.1 million in revenue. The Measure M transfer totaled about $9 million per year but the court’s ruling will result in about $7.5 million less being transferred into the general fund annually, Gold said.
Editors note: The original version of this story said the water department had been transferring $11 million to the city’s general fund. Part of that transfer is a “nexus” amount that covers costs for Public Works to do street repairs and other work when water department pipes are replaced. The nexus amount was determined to be legal by the court ruling.
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