Glendale’s Budget is in for a Tough Time.
Glendale’s budget has been precarious ever since the city started transferring $20 Million per year from Glendale Water and Power (GWP) to the General Fund to pay for general services. While politicians and city staff paint a rosy picture that they “balanced the budget” every year, the fact is that the budget has been balanced at the expense of the GWP infrastructure and maintenance needs. In a 2012 investigative report, the Los Angeles County Grand Jury found the annual $20 million transfer was a violation of the law and stated specifically that the City of Glendale may not “use GWP as its ‘piggy bank’ to satisfy budgetary shortfalls.” Also, in 2017, a Los Angeles Superior court found Glendale in violation of the law due to the transfers and ordered it to pay back residents
After continually using the GWP as a piggy bank to draw upon for budgetary shortfalls, Glendale’s Power Plant is now in need of $500 Million re-power. $500 Million that will be borrowed to pay for the re-power. Eight out of the nine generation units are well beyond their useful life and have been operating for years spewing pollutants into the air. Yet each year $20 Million continues to be dutifully transferred to the General City Fund to maintain employee benefits at the expense of GWP assets. Given that GWP is in such dire condition, serious concern exists on where the $20 Million for next years budget is going to come from.
More pressure is mounting on the city’s budget from CALPERS that administers the city employees pensions. Legal challenges are mounting that questions the entitlement of benefits to employees and the City’s continued obligations to fund them. This caused CALPERS management to reduce the payback period for unfunded pension obligations from 30 years to 20 years to ensure it can collect all it can before changes in the law. Changing the amortization years from 30 years to 20 years creates a 27% increase in the annual payments the city is required to pay back. Funds that the city does not have.
The budgetary pressures on Glendale have created a great rush upon which the city wishes to implement this $500 million re-power. The proposed re-power is controversial due to the continued use of petroleum based fuel and does not take adequate consideration for new and renewable sources of energy and power management technologies. Opponents of the re-power question the environmental impact on health and the wisdom of investing $500 million in antiquated technologies without a comprehensive study for renewable alternatives. There seems to be a huge rush to implement this re-power despite large opposition from the public. An opposition that calls on GWP to slow down and consider renewable options.
Given the above constraints, Glendale will certainly be challenged to balance the budget. However, fattening up the piggy bank with $500 million will sure go a long way in continuing the illusion of a balanced budget if only it can be done fast enough.