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DWP pushes L.A. into urgent fiscal crisis

April 5, 2010 12:00:00 AM PDT
The city of Los Angeles was already deeply in debt, and it needed a transfer of money from the Department of Water and Power to help it balance its budget. Now, it's not going to get that money. The city will be $10 million more in the hole and will be out of money by May 5. The DWP came to the city asking for a rate increase and didn't like what the city council offered, so the utility is refusing to transfer $73 million that the city was counting on to help balance its budget.

Another showdown looms on Tuesday between the DWP and the L.A. City Council, as council members try to figure out if there is any way they can force the utility to turn over the money.

City Controller Wendy Greuel calls it the most urgent fiscal crisis in recent history. The city must transfer money from its reserve in two weeks or it will be unable to pay people.

"We can't ask people to come to work if we know that we won't be able to pay them," Greuel said.

Councilman Bernard Parks, head of the budget and finance committee, said the DWP has been playing games for months.

"We'll give you 73, but if you vote for it we'll give you 93. Well, those are terms that probably in my prior life would have been called extortion and other things like that," Parks said.

The city council and the DWP had jockeyed back and forth last week over a rate increase, but the deadline for the rate hike came and went without a resolution.

The council now has a deadline of April 19 to transfer more than $90 million from its reserve fund or get the DWP money.

"Promises are not something I can pay the bills with, it's actually the cash that I have on hand. Last week I think everyone played chicken to see who would blink first, and unfortunately, I'm in this situation today having to look at how I'm going to be able to pay the bills without transferring money from our reserve fund," Greuel said.

The lights will stay on, but the DWP says it needs all the available money to buy coal and natural gas to make power. Parks is not the only skeptical council member.

"They have had a history of playing 'hide-the-ball,'" Parks said. "They've had a history of giving you just enough information that they want you to know."