DWP Interim General Manager, refreshed from his extended vacation in Israel and France, retaliated against the City Council for its refusal to submit to a bigger rate hike and declared he won’t transfer the $73 million he promised to deliver without a problem barely two months ago.
His action — clearly on order’s from the mayor who has turned the DWP Commission and its managers into stooges — prompted Controller Wendy Greuel to put out her “most urgent” warning yet that the city general fund will out of cash to pay salaries and bills in 30 days.
She said she needs $90 million from the depleted reserve fund within two weeks to keep city employees working past May 5. The city could end the fiscal year June 30 in the red and with a “negative $43 million” in the reserve fund, she noted
Here is an excerpt of her letter to the mayor and City Council leaders (Go to OurLA.org for the full text and for the full text of Freeman’s letter):
“While we are still analyzing the .full impact of the actions taken – some tangible, some merely visual – to address the budget crisis, none of them have been successful in balancing the budget so far…
“This is the most urgent fiscal crisis that the City has faced in recent history, and it is imperative that you act now. The Charter authorizes the Controller to borrow funds but only for tardy receipt of revenue, not in the case where there is no anticipated repayment. The Charter also grants the Controller authority, with Council approval, for inter-fund borrowing, but only until April 26th, 2010. Thus I am asking you to immediately transfer $90 million from the City’s Reserve Fund to the General Fund so I can continue to pay the City’s bills, and to ensure the fiscal solvency of the City.
“With the City facing a massive budget deficit this year and a deficit twice as large next year, the time for talk is over, the time for action is upon us. As you know, City employees are paid two weeks in arrears and we cannot legally permit them to work when there are not sufficient funds to pay them. That is why I am alerting you that, unless you take action to transfer $90 million from the Reserve Fund, beginning April 19th, 2010, my office may not be able to pay the salaries of all City employees and/or make payments to vendors.
“We have two weeks to address this crisis, which is why you must act immediately,” Greuel said in her letter to the mayor and City Council. “I cannot be more clear that urgent action is needed.”
Freeman escalated the war with his letter Monday to the mayor and Council, blaming the action on the Council’s refusal last week to grant the extra $2 million a month in rate hikes under the catchall Energy Cost Adjustment Factor.
“As stated many times during the past 11 months, ECAF expenditures are increasing by $550 million over the Fiscal Year (FY) 2009·2010 to FY 2010- 2011 time period. The proposed ECAF increases are needed to fund this and without increases we have deficits, not surplus,” Freeman wrote..
“While the Power Revenue Fund closed its 2009 fiscal year with $444.7 million in unrestricted cash, it also had an under collection of $113.9 million in energy costs already incurred. It was believed that when discussions began on May 19, 2009, relative to increasing the ECAF cap above the $0.001 amount, the request would be vetted for its merit, the City Council third-part consultant would make a final recommendation, and rate relief would be approved within the 2009-10 fiscal year. At the time, the increase was being sought to provide cash for operations beginning in fiscal year 2009-2010. Since rate relief has not occurred, LADWP will be forced to use all funds to pay for energy costs that should otherwise be fully recovered through the ECAF mechanism. There is no surplus money to transfer at this time.”